Figures released this morning by the Office for National Statistics (ONS) show that the UK economy grew by 0.5% in the quarter to the end of September.
The figure represents a welcome increase on the rise of just 0.1% in the period April to June, but other data suggests the economic picture is still gloomy.
Output from the production sector rose 0.5% in the last three months compared to a fall of 1.2% in the second quarter. The performance of the service sector also improved up from 0.2% in the second quarter to 0.7% over the past three months.
Although the growth is to be welcomed the ONS emphasised that the figures for the second quarter were artificially low due to one off events such as the royal wedding, the Japanese Tsunami and an additional bank holiday. Economic experts are therefore warning that the figures released today should not be interpreted as a large economic rebound.
Indeed other data has painted a gloomy picture for the UK economy.
Unemployment is at a 17 year high for the three months to September, consumer confidence has fallen back to pre recession levels and figures from the CBI have shown that manufacturers have seen a drop in orders over the past year which could lead to more job cuts.
Unsurprisingly the chancellor, George Osborne, welcomed the latest figures describing them as a “positive step”. Adding: “Of course the British economy has got this difficult journey. It is a journey made more difficult by the kinds of things you see for example today in the markets because of the situation in the eurozone.”
“But we are determined to finish this journey,” he added.
Expert reaction was mixed, James Knightley, at ING Financial Markets, said: “While the Q3 growth rate looks respectable, it is important to remember that this follows a Q2 figure depressed by having fewer working days because of the royal wedding and supply disruptions caused by the Japan earthquake/tsunami.”
Mr Knightley continued “So, for the economy to have only grown 0.5% in Q3 suggests the underlying picture remains weak.”
Howard Archer, economist at IHS Global Insight, added: “This performance overstates the underlying strength of the economy and this is likely to be as good as it gets for some time to come.”
The graph below shows just how deep the recession has been, almost as bad as the great depression of the early 1930’s. It also shows how sluggish the recovery has been with the rise out of recession slower and more fragile than in previous recessions.