Goldman Sachs disagree with the Office for National Statistics (ONS)
Ben Broadbent, of Goldman Sachs, who has long argued that the ONS was understating the strength of the economy.
To say he thinks the figures should be treated with a grain of salt would be an understatement:
"Do today's data tell us anything about what is really going on in the economy? Probably not. In the past, the ONS's early GDP estimates have contained no statistically useful information about growth. In the 10 years to 2007Q4 (the latest quarter for which we have fully reconciled UK GDP data), the correlation between quarterly GDP growth according to the first release and quarterly GDP growth based on the most recent data is only 0.10. In a regression of the latest quarterly growth on the first quarterly estimate, the coefficient on the early official estimate is not significant. The correlation between the UK's latest data and the Euro-zone's first release is much higher, with a correlation coefficient of 0.34. Amazingly, if one wants to know in real time what is happening in the UK economy, it has been better to follow the Euro-zone's early GDP estimates than the UK's GDP estimates.
The data also run contrary to pretty much every other indicator of UK growth. The Composite PMI - which has historically been a more reliable indicator of UK growth than the ONS's preliminary estimate - is consistent with growth of +0.7%qoq."
