According to the UK Office of National Statistics in their latest update UK Gross Domestic Product (GDP) has increased by 0.5% in the first quarter of 2011. This increases makes up for a fall in GDP in the last quarter of 2010 (where GDP fell by 0.5%). This rebound can clearly be observed in Figure 1.
However, as the growth in Q1 2011 has only made up for the ground lost in Q4 2010, this suggests that UK GDP has remained relatively unchanged since Q3 2010. This may suggest that any talk of rapid economic recovery in early 2010 may have been unfounded. With growth essentially being static from Q3 2010 onwards.
When we break down the causes of Growth in Q1 2011 (comparing them to Q1 2010) in Figure 2, it can clearly be observed that the construction sector continues to decline rapidly. While Transport, Storage and Communications has moved from static growth in Q1 2010 to rapid growth in Q1 2011. Indeed it appears to be the services sectors which are driving growth with Business Services and Finance also growing rapidly. Agriculture and Production (manufacturing) are also growing. This general growth across the economy (with the notable negative construction effect) is encouraging. Growth appears to be arriving through a number of channels as oppose to being concentrated in any one particular of the economy suggesting that the growth achieved may be robust to any shocks in different sectors.
Justin Doran is a Lecturer in Economics, in the Department of Economics, University College Cork, Ireland.