Economic Review – November 2011

Economic Review – November 2011

Key points

  • GDP growth was 0.5 per cent in the third quarter of 2011. Although this is a more solid pace of
    growth than in recent quarters, growth over the year has also been 0.5 per cent, so an average of
    just over 0.1 per cent in each quarter, and an average of 0.3 per cent over the last two quarters.
    Although the economy continues to expand, it is at a relatively modest pace, particularly compared
    to the stronger pace of growth observed in the middle of 2010, and compared to recoveries from the
    previous two recessions in the early 1980s and early 1990s.
  • The labour market appears to be reflecting the weakness of economic activity more closely now,
    with unemployment rising and employment levels and rate falling. Wage growth continues to be
    subdued and well below CPI inflation.
  • The ongoing deterioration in the trade balance, into September, indicates that the positive
    contribution to GDP growth seen in the first quarter of 2011 has not been sustained, despite the
    continued weak value of sterling.
  • Inflation came down by 0.2 percentage points, to 5 per cent in October, reflecting primarily a decline
    in food prices due to widespread supermarket discounting and good harvests for a range of fruit
    and vegetables.
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