Global| Apr 25 2007On-Trend GDP Growth for Q1 in UK and South Korea
Summary
GDP expanded 0.7% in the UK in Q1 2007, the same as in Q4 and a bit better than forecasters' estimate of 0.6%. The year-on-year gain was 2.8%. At first glance, the most notable aspect of this Office for National Statistics [...]
GDP expanded 0.7% in the UK in Q1 2007, the same as in Q4 and a bit better than forecasters' estimate of 0.6%. The year-on-year gain was 2.8%. At first glance, the most notable aspect of this Office for National Statistics "preliminary" GDP report is a decline in manufacturing. That sector's value added declined by 0.3% from Q4. It was up just 1.4% from a year ago. However, this is not seen as a sign of weakness; most segments of this sector, according to ONS's "Briefing Notes" held basically flat.
The main story in the UK data, at least for this quarter, is the upturn in the mining sector. The opening of the new Buzzard oil field in the North Sea yielded a 1.4% quarterly advance in the mining sector following almost five years of decline. Utility output also gained 1.4%. The services sector remained the mainstay of growth, up 0.8% and 3.5% year-to-year. Transportation and business services both had expansions of more than 1%.
The other main economy to publish Q1 GDP today is South Korea. Its growth was 0.9%, also the same as in Q4, with 3.9% growth year-on-year. Unexpectedly for an Asian country, manufacturing output declined here as well, by 0.8%. Consumer electronics and 
electrical equipment were the main sources of the decrease, according to industrial production data through February. Again, as with the UK, analysts seem unconcerned. Korea publishes its entire array of GDP, including the expenditure side, in this initial quarterly report, and observers took note of a good gain in exports, up 3.2%, following just 0.5% in Q4. In volume terms, exports constitute almost 60% of Korea's total GDP. So the implication is that, in the absence of evidence of a demand slowdown in China or the US, Korea's manufacturing sector can remain in an overall expansion, if not every single quarter.
The Korean services sector is also expanding. It grew 1.2% in Q1, also duplicating the Q4 gain. Transportation, finance and health care had the biggest increases. Among other demand components, household consumption gained 1.3%, and capital investment was up 2.0%, mostly in equipment.
| GDP (SA, % Chg) | Q1 2007 | Q4 2006 | Q3 2006 | Year/Year | 2006 | 2005 | 2004 |
|---|---|---|---|---|---|---|---|
| UK Total | 0.7 | 0.7 | 0.7 | 2.8 | 2.8 | 2.0 | 3.2 |
| ex Oil & Gas | 0.7 | 0.7 | 0.6 | 3.0 | 2.9 | 2.2 | 3.5 |
| Mining | 1.4 | -0.6 | -3.5 | -6.3 | -7.9 | -9.5 | -7.9 |
| Manufacturing | -0.3 | 0.1 | 0.7 | 1.4 | 1.5 | -1.0 | 2.0 |
| Services | 0.8 | 0.9 | 0.8 | 3.5 | 3.6 | 2.9 | 3.9 |
| South Korea | 0.9 | 0.9 | 1.2 | 3.9 | 5.0 | 4.2 | 4.7 |
| Manufacturing | -0.8 | 1.0 | 2.2 | 4.0 | 8.4 | 7.1 | 11.1 |
| Services | 1.2 | 1.2 | 0.9 | 4.1 | 4.2 | 3.4 | 1.9 |
Carol Stone, CBE
AuthorMore in Author Profile »Carol Stone, CBE came to Haver Analytics in 2003 following more than 35 years as a financial market economist at major Wall Street financial institutions, most especially Merrill Lynch and Nomura Securities. She has broad experience in analysis and forecasting of flow-of-funds accounts, the federal budget and Federal Reserve operations. At Nomura Securites, among other duties, she developed various indicator forecasting tools and edited a daily global publication produced in London and New York for readers in Tokyo. At Haver Analytics, Carol is a member of the Research Department, aiding database managers with research and documentation efforts, as well as posting commentary on select economic reports. In addition, she conducts Ways-of-the-World, a blog on economic issues for an Episcopal-Church-affiliated website, The Geranium Farm. During her career, Carol served as an officer of the Money Marketeers and the Downtown Economists Club. She has a PhD from NYU's Stern School of Business. She lives in Brooklyn, New York, and has a weekend home on Long Island.
