The UK economy: What's a few basis points amongst friends? A lot if you're speaking recession.

NEW YORK - May 11, 2013 - PRLog -- A revision by the Office for National Statistics (ONS) Suggests UK avoided double-dip recession last year.

Indeed, revised growth estimates now suggest the construction industry shrank in the first quarter of 2012, but by less than previously thought.

"While not totally out of the woods yet, this revision may be enough to mean the overall UK economy narrowly avoided falling into recession for a second time since 2008" said Steve Picarillo, lead analyst for S JP Financial Advisory, part of the Creative Advisory group, Inc. company.

The revised figures show the construction sector shrank by 5% in the first quarter of 2012, less than the 5.4% contraction initially reported.

The ONS gives its final estimates for growth in June, and if other parts of the economy remain unchanged, the economy as a whole would register zero growth, rather than a contraction of 0.1%. This ever so slight difference of only 10 basis points can mean the difference between a “recession” and a “downturn”. "While not a real big deal in relation to the whole economic picture, the impact to the confidence level is much bigger, given the impact that confidence has on consumer and business spending (and hiring)"continued  Mr. Picarillo.

Recall, a country is in recession when the economy registers two consecutive quarters of negative growth. So, as such, at this time, it looks as though the UK has not formally been in recession. However, the ONS may also revise the growth of other parts of the economy when it publishes its final estimates in June, such as the much larger services sector, which may offset the gains in construction. So, it is too early to be sure if the UK actually skirted recession.

"It is important to note that construction accounts for less than 7% of the UK economy, whereas the services sector makes up about three quarters of output. Despite this, the construction sector's weakness has been blamed for dragging down economic growth" added Steve. The ONS figures showed that construction output fell again in the first quarter of 2013, reaching its lowest level in 15 years. Indeed, construction output was down 2.4% compared the last quarter of 2012. while, output has fallen by nearly a fifth since the height of the construction boom in 2008.  This is partly led by the fall in private-commercial, which accounts for approximately 22% of total Construction Output, and is now 38% below its peak in 2008 and at its lowest level since Q4 1997. The full report is athttp://www.ons.gov.uk/constuction report (http://www.ons.gov.uk/ons/rel/construction/output-in-the-...).  

The ONS will publish the Quarterly National Accounts on 27 June, so more to follow.

Steve Picarillo is an internationally recognized financial executive, corporate analyst and author. Steve has spent most of his career on “Wall Street” as a lead analyst covering the world’s largest financial institutions. Mr. Picarillo’s rapidly expanding global consulting business, Creative Advisory Group, Inc., focuses on helping individuals and companies achieve their financial and business goals. In addition to a global banking expert, Steve is a franchise consultant, branding expert, motivational speaker, cost savings expert and an expert on the global economic environment. Steve’s website is www.stevepicarillo.com.