Economic review

Abstract

The second estimate indicated that GDP fell by 0.3 per cent in 2009 Q3, marking the sixth successive quarterly fall in output. However, the pace of contraction has slowed since the turn of the year. This is reflected in the output indices of the production and services sectors, where the rate of decline has moderated in the last two quarters. The third quarter construction output figures showed growth after the previous falls, which will be reflected in future GDP estimates. There is some evidence that the vehicle scrappage scheme has had a positive effect, with the output of motor trades growing in the third quarter. On the expenditure side, household consumption, which had previously fallen for five successive quarters, was flat. The rate of decline in Gross Fixed Capital Formation also fell sharply, but net trade made a negative contribution to growth, as imports grew faster than exports. In the labour market, unemployment continued to rise, but the latest increase was the smallest since spring 2008. The greatest increases in unemployment and inactivity rates during the recession have been felt by the under 25 age groups. CPI inflation rose to 1.5 per cent in October from 1.1 per cent in September, partly reflecting the continued rise in motor fuel prices throughout 2009. © 2009 Economic & Labour Market Review.