Output falls for 10th quarter in a row

OFFICIAL figures confirmed yesterday that the recession has lasted for two- and-a-half years, six months longer than any other downturn since the 1930s.

Excluding North Sea oil and gas production, national output fell in the fourth quarter of last year, the 10th successive quarter in which it failed to recover, according to provisional estimates by the Central Statistical Office.

Only if a North Sea recovery was included did the figures show output inching 0.2 per cent higher, the first rise in overall output since the third quarter of 1991.

For the whole of 1992 overall gross domestic product fell by 0.5 per cent from 1991, a more positive outcome than the 1 per cent drop predicted by the Chancellor last November.

But, excluding oil and gas, the latest quarterly contraction of 0.1 per cent brought the overall fall in output to 3.9 per cent since the second quarter of 1990, the last peak in activity.

In the first three quarters of 1992, non-oil national output was flat and for all of 1992 it shrank by 0.7 per cent over 1991.

The non-oil economy fell by a deeper 6.2 per cent in the 1979-81 recession but over a shorter eight-quarter period. In 1973-75, before oil and gas production became a significant economic force, national output shrank by 3.5 per cent over eight quarters.

The latest figures underlined the importance of oil and gas output to highly tentative signs that recession may be ending. A 6.3 per cent surge in oil and gas production in the latest quarter, together with higher output by other sectors of the energy industry, helped to explain the marginal recovery.

In contrast, factory output fell by 0.2 per cent and the depressed construction industry slumped by a further 1 per cent. But Wood Mackenzie, the stockbroker, yesterday estimated that bad weather cut oil output in January by 5 per cent to 1.9 million barrels per day.

The CSO also announced an upward revision in the level of gross domestic product for 1992 after significantly higher agricultural yields and output were confirmed by the Ministry of Agriculture.

The Treasury was 'moderately pleased' by the rise in overall national output. A spokesman said the Treasury was modestly optimistic for first-quarter prospects following a small rise in manufacturers' expectations for higher output.

In addition, the Treasury believes that much of the impact of the 4-point fall in interest rates since September did not affect activity in the fourth quarter and is more likely to affect the economy in the first half of this year.

The Treasury's latest compilation of 22 independent forecasters shows that on average these economists expect GDP to grow by 1.1 per cent this year. The latest Treasury prediction puts output 1 per cent higher in 1993.

The latest CSO figures on property transactions, however, failed to point to any revival in the housing market. Seasonally adjusted transactions - largely housing - fell by 8,000 to 82,000 in January after adjustment for seasonal influences.

In contrast Brian Pitman, chief executive of Lloyds Bank, said there were 'real signs' of a pick-up in several businesses which were longer leading indicators of economic performance such as packaging, road haulage and the brick industry. Most banks were also seeing 'signs of movement' at the bottom end of the housing market.

A new survey of regional prospects, by Business Strategies, argued that the Midlands, Wales, East Anglia and Northern Ireland would lead the recovery with growth equal to or in excess of 2 per cent this year.

The pound was barely affected by the latest figures, losing half a pfennig to close at DM2.3702. The yen moved to centre stage in the currency markets, climbing to a new record high of 116.08 against the dollar, a gain of three yen on the day.

(Graph omitted)