Belfast Telegraph

Roll out the barrel after services power economy

By David Elliott

Well don't roll out the barrel yourself, subcontract it out to one of the companies in the service sector which have been so busy lately. They'll do a better job and you'll probably save money in the long run.

Certainly that seems as if everybody else is doing just that. Output from the service sector put in a sterling performance in January, climbing 1.3% against a 1.1% contraction in December.

Now don't glaze over just because we're talking percentages. The figures represent a big turnaround for a sector which had suffered badly from the economic downturn and it's great to see the businesses which hurt the most making such a good recovery.

Just take a look at hotels and restaurants, which saw output rise 4.4% compared to December, or transport, storage and communications firms, where it was up 1.7%.

Such a strong performance may not sound like much but it offers an insight into what the big GDP number will hold for the first quarter which ends today.

Fourth quarter 2010 GDP at -0.6% was a kick in the teeth for economic bulls and expectations had been tempered so much that even yesterday's 0.1% revision higher was met with excitement.

Yesterday's service sector figures have sent our economic Mystic Megs into a state of giddiness not seen since Milton Friedman raised a critical eyebrow at John Maynard Keynes' trust in government to regulate their own economies.

If the service sector has picked up then there's every chance the rest of the economy has also experienced an injection of energy and there's growing optimism that a ramp up in UK GDP of 1% is now possible.

The data won't be out for a while but there's every reason to believe it's time to get out those barrels. Even better if they're locally made barrels, filled with locally sourced produce and suitable for export. Now that would boost GDP.