Take it all with a pinch of salt

Isn’t it about time we stopped paying attention to all these various economic and market datasets — or at least started to give them the far smaller level of attention they deserve?


As I see it, they’re a waste of everyone’s time and rarely say anything that isn’t contradicted a day or so later by another dataset.

A couple of examples spring to mind over the past week or so.

Firstly, at the end of March we had the Organisation for Economic Co-operation and Development coming out saying that the UK is back in recession, with GDP set to contract by 0.4% in the first three months of the year.

Given that only the day before the Office for National Statistics had revised down its GDP number for the final quarter from -0.2% to -0.3%, the OECD’s estimate, while downbeat, seemed plausible.

But then we had the UK Services PMI, which this week showed that the services sector enjoyed a hugely strong March. It was rampant, in fact.

Given that the services sector makes up the bulk of the economy, the economists were suddenly talking about how GDP could have grown by 0.5% in the first three months of 2012. The gloomy prognoses of a week earlier were rapidly superseded by a new optimism.

A new optimism, which didn’t — surprise surprise — last for long. Our trusty friends in their ivory towers had been predicting growth in the UK’s manufacturing sector.

As sure as eggs is eggs, the data, which emerged today, showed that manufacturing contracted by a full per cent in February. Suddenly, the skies are grey again.

In a matter of days, we’ve gone from bad to good to bad. And we’re none the wiser about what’s really happening in the economy.

The same schizophrenic, and ultimately meaningless, patterns apply to the property market. Last week the Nationwide came out saying that prices had fallen by 1% in March, as the frantic rush created by the Stamp Duty holiday fizzled out.

Yesterday, the Halifax came out and said that the Stamp Duty rush in March had contributed to prices rising by 2.2% last month. The huge disparity in these two lenders’ estimates of house prices, and what’s causing their rises or falls, says it all.

The message is this: forget the pair of them, because neither gives any meaningful portrayal of the property market. Likewise, take all these economic datasets with a pinch of salt. No, not a pinch, a skipload.