Reasons To Be Cheerful, Part 3

10th September 09 – Reasons to be cheerful, part 3

In my continuing quest to be cheerful, I have found something. Not much, but something. In the second quarter ended June 09, the UK GDP did not as reported earlier fall to -0.8%. Rather it fell to -0.7%. I did say it wasn’t much!

The reasons for the betterment were said to be:-

• A 0.8% rise in government spending (that is better!!)

• The success of the “cash for clunkers” car scrappage scheme

• More manufacturing output

• More energy extraction and supply

• A positive contribution from net trade as imports fell more than exports

The Society of Motor Manufacturers and Traders (SMMT) supplied figures showing that car and commercial vehicle production increased 38% between May and June 09 noting that the majority are exported. Still trying to be up-beat, taken on an annualised basis, the UK’s economy has proved more resilient than for Japan and Germany since their GDP has fallen more.

As reported yesterday, those driving the FTSE 100 liked the news and sent the leading index up 6.5% in the month of August alone closing at 4909. Reaching a psychological 5,000 could trigger more cheer.

What else can we find? Most commentators think that UK GDP will return to positive territory in the third quarter. Whoopee. If that happens, it will be the fourth reason to be cheerful. But best not get carried away.