Recent Updates

  • Euro area: Flash Consumer Confidence (Jun)
  • US: Personal Income by Region and State (Q1)
  • US: Philadelphia FRB Mfg Business Outlook Survey (Jun)
  • France: Business Surveys: Industry, Composite Indicators, Construction, Services (Jun)
  • UK: Public Sector Finances (May)
  • Turkey: Consumer Confidence Index (Jun); South Africa: BOP, IIP (Q1); Israel: IP (Apr); Palestine: IIP (Q1-Prelim); Lebanon CPI (May)
  • more updates...

Economy in Brief

On-Trend GDP Growth for Q1 in UK and South Korea
by Carol Stone April 25, 2007

GDP expanded 0.7% in the UK in Q1 2007, the same as in Q4 and a bit better than forecasters' estimate of 0.6%. The year-on-year gain was 2.8%. At first glance, the most notable aspect of this Office for National Statistics "preliminary" GDP report is a decline in manufacturing. That sector's value added declined by 0.3% from Q4. It was up just 1.4% from a year ago. However, this is not seen as a sign of weakness; most segments of this sector, according to ONS's "Briefing Notes" held basically flat.

The main story in the UK data, at least for this quarter, is the upturn in the mining sector. The opening of the new Buzzard oil field in the North Sea yielded a 1.4% quarterly advance in the mining sector following almost five years of decline. Utility output also gained 1.4%. The services sector remained the mainstay of growth, up 0.8% and 3.5% year-to-year. Transportation and business services both had expansions of more than 1%.

The other main economy to publish Q1 GDP today is South Korea. Its growth was 0.9%, also the same as in Q4, with 3.9% growth year-on-year. Unexpectedly for an Asian country, manufacturing output declined here as well, by 0.8%. Consumer electronics and electrical equipment were the main sources of the decrease, according to industrial production data through February. Again, as with the UK, analysts seem unconcerned. Korea publishes its entire array of GDP, including the expenditure side, in this initial quarterly report, and observers took note of a good gain in exports, up 3.2%, following just 0.5% in Q4. In volume terms, exports constitute almost 60% of Korea's total GDP. So the implication is that, in the absence of evidence of a demand slowdown in China or the US, Korea's manufacturing sector can remain in an overall expansion, if not every single quarter.

The Korean services sector is also expanding. It grew 1.2% in Q1, also duplicating the Q4 gain. Transportation, finance and health care had the biggest increases. Among other demand components, household consumption gained 1.3%, and capital investment was up 2.0%, mostly in equipment.

GDP (SA, % Chg) Q1 2007 Q4 2006 Q3 2006 Year/Year 2006 2005 2004
UK Total 0.7 0.7 0.7 2.8 2.8 2.0 3.2
  ex Oil & Gas 0.7 0.7 0.6 3.0 2.9 2.2 3.5
  Mining 1.4 -0.6 -3.5 -6.3 -7.9 -9.5 -7.9
  Manufacturing -0.3 0.1 0.7 1.4 1.5 -1.0 2.0
  Services 0.8 0.9 0.8 3.5 3.6 2.9 3.9
South Korea 0.9 0.9 1.2 3.9 5.0 4.2 4.7
  Manufacturing -0.8 1.0 2.2 4.0 8.4 7.1 11.1
  Services 1.2 1.2 0.9 4.1 4.2 3.4 1.9
close
large image