GDP Decline Revised Upwards

GDP fell by 0.7%, revised from 0.8%, in the second quarter of 2009 compared with the previous quarter. GDP is 5.5% lower than Q2 2008. It is the biggest four quarter fall on record accoring to the ONS. Nominal GDP showed no growth for the quarter. The GDP deflator rose by 1.3% compared with Q2 2008.

The slowdown in output from Q1 to Q2 is due to the services, production and construction sectors. Services fell by 0.6%, production by 0.6% and construction by 2.2%.

Household expenditure fell by 0.7%. An increase in spending on motor vehicles, food and drink was offset by the continued edcline of spending abroad. Government expenditure rose by 0.8%. The volume of spending is 2.5% higher than Q2 2008. The net trade deficit fell to £7.3bn as imports fell faster than exports at 3.7% and 2.6% respectively. The export of services fell by 2.6% and the import of services by 1.9%. Gross fixed capital formation fell by 4.5%.

Employee compensation increased by 1% in the quarter, but still 1.2% below the same quarter last year. The gross operating surplus of corporations decreased by 3.6% following a 4.5% fall in Q1 2009. Taxes less subsidies increased by 3.6%. There was no change in the growth of nominal GDP at market prices.

Sales Values Fall

Retail sales values fell by 0.8% in the year to May on a like-for-like basis but the total showed only a 0.8% increase in total. These BRC statistics are actual values that include VAT and are taken from a sample of retailers. It is a measure of the volume of spending. It does not reflect price changes so if prices rise the volume increases by less than sales values. The values for non-food non-store sales, which includes Internet sales, reported a 7.6% change on last year. It continues to out-perform store sales but it is the weakest figure reported since the measure began. The quarterly figures show increases of 5.4% like-for-like and 6.8% in total for food sales and a 2.4% increase in total over all categories.