Are The GDP Results As Bad As They Seem?

Well, that wasn't supposed to happen.

You could almost hear Conservative strategists telling each other that after the Office for National Statistics (ONS) reported that UK GDP grew by a mere 0.3% during the first three months of the year .

That was half the 0.6% growth achieved during the final three months of 2014 and substantially less than the 0.5% to 0.6% that most City economists were expecting.

On the face of it, the numbers are not great for a Government proud to be standing on its economic record .

The picture painted by the ONS points to an economy that remains every bit as unbalanced as it was when David Cameron became Prime Minister, with a 0.5% growth in services activity - the largest part of the economy and accounting for just over three-quarters of GDP - during the quarter outweighed by a 1.6% contraction in construction and smaller contractions, 0.1% and 0.2% respectively, in production and agriculture.

And yet there are very good reasons for thinking that these numbers are not quite as bad news for ministers as they seem.

Firstly, bear in mind this is a preliminary estimate.

The UK publishes its first estimates of GDP growth earlier than any other leading economy and, accordingly, the ONS invariably only has about 45% per cent of the data at its disposal when doing so.

The clue is in the word "estimate" - these figures are prone to revision.

Secondly, there are reasons to suspect that if there is a revision, it will be upwards.

This is because the data published by the ONS appears to be strongly at odds with those of other recent surveys of economic activity.

Take that 1.6% drop in construction activity that the ONS thinks happened during the quarter and compare it with the widely-followed Purchasing Managers Index published by data provider Markit (NasdaqGS: MRKT - news) .

The monthly surveys it publishes, where a reading above 50 indicates growth and anything below 50 a contraction, were 59.1, 60.1 and 57.8 for construction - figures pointing to robust growth.

And look also at the monthly reports prepared by the Bank of England's renowned network of regional agents.

They described construction output growth as "strong" in January and "robust overall" in February and March.

Neither the Markit data or the Bank of England's agents reports, then, appear to tally with what the ONS is saying.

There is a precedent here: three years ago, almost to the day, the ONS reported that the UK was back in recession.

It claimed that the economy, following a 0.3% contraction in the final three months of 2011, had contracted by a further 0.2% during the first three months of 2012.

At the time, many City economists were suspicious, arguing that the ONS data contradicted the Markit and Bank of England data. They were eventually proved right.

The ONS data was subsequently revised and the recession proved not to have happened after all.