Figures this week reminded us of the precariousness of the recovery. Official numbers showed a surprise fall of 1.2 per cent in manufacturing output in August, while the British Retail Consortium reported that like-for-like sales rose only 0.7 per cent in the year to September, the weakest growth since April. But economists weren't troubled by these. Because they follow months of good growth, it's likely that GDP grew well in the third quarter. Instead, they highlight four other obstacles to growth.
One is the drop in real wages. Figures next week are expected to show that earnings rose 1.5 per cent less than prices in the last 12 months - which is likely to hold back consumer spending.
Secondly, export markets are weak. This week's figures showed that export volumes fell by 1.5 per cent in the latest three months - a sign that weakness in emerging markets is offsetting a pick-up in the euro area demand.
Thirdly, fiscal austerity will resume next year. One measure of fiscal policy is the cyclically-adjusted primary deficit. The OBR forecasts that this will narrow by over 1 per cent of GDP next year - implying a tightening of policy - having widened this year.
Fourthly, this week's BCC survey found that companies' investment intentions are still below 2007's levels, despite a pick-up in the availability of credit. One reason for this was highlighted by official figures this week. These showed corporate profit rates well below 2007's level, and barely higher than at the worst point of the recession in 2009.
Most economists, therefore, are sceptical about the pace of recovery. Neil Williams of Hermes Fund Managers says "it remains to be seen how much of the UK's latest growth surge is linked more to temporary feel-good factors, rather than something more durable". And Jens Larsen at RBC says growth "is likely to be more moderate than the recent strength of the activity and demand indicators have suggested".
