Recent data indicates UK economy is stabilising
The National Institute of Economic and Social Research (NIESR), the respected think tank, said the British economy is seeing signs of stability after the recent flurry of positive data.
According to the NIESR, the economy grew in May by 0.1% and follows a similar rise in the previous month and was the first growth in a year.
If the NIESR forecasts prove to be correct, Britain could be the first major industrialised economy to emerge from recession.
The NIESR bases its estimates on information from the Office for National Statistics (ONS) and private sector surveys.
However, while the NIESR’s outlook is positive, several economists believe that unemployment will continue to rise, while the banking system could remain weak and the slowdown in consumer spending will continue.
Earlier this week, the deputy governor of the Bank of England, Paul Tucker, said that a clearer picture of the economic outlook will not be possible until the autumn.
However, in related news today, the ONS revealed that UK industrial output showed a surprise increase in April – the first month-on-month rise for 14 months.
According to the ONS, industrial output rose 0.3% from March – analysts had forecast a decline of 0.1%.
Furthermore, the ONS reported that manufacturing output also rose 0.2% in April compared with March – which was also unexpected.
The figures are fuelling hopes that a recovery may be on the cards since the latest Chartered Institute of Purchasing and Supply’s survey revealed that the services sector rose for the first time in a year.
In the meantime, there was further good news yesterday as the Department of Communities and Local Government (DCLG) reported that UK house prices climbed by 1.1% in April.
Furthermore, the Royal Institution of Chartered Surveyors announced this week that new buyer enquiries rose for the seventh consecutive month in May, while completed sales were at their highest since August 2008.
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