As with many other commentators we got it wrong as from our
tea leaves detailed trend analysis of dot-uk new domain registrations we were forecasting a positive growth scenario for the last quarter. Our only hope of recovering some of our credibility, at the expense of the ONS’s, is a subsequent revision to the figures showing a complete turnaround which to be honest is, not unprecedented, but unlikely! The construction sector seems to be dragging us all down but even the ONS reckon a revision to “…. March would need to be exceptionally strong (40 per cent higher than February) to produce growth for the quarter”.
We’ve experimented by offsetting the trends on our graph but can’t identify a credible predictive scenario for the last quarter.
So lets move on and see what the future might hold.
From a chartist view the last time there was such a dramatic improvement (some 40.8%) in the registrations in consecutive quarters (ie from Q4 2011 to Q1 2012) was Q4 2008 to Q1 2009 when a 40.7% increase occurred. Following that increase GDP recovered by some 5.6% in the following quarter (or by 88% of its negativity). If this recurred then Q2’s GDP could improve and be between 0.0% and 1.2%.
On a fundamentalist view registrations have been very weak for the last 2 quarters and a further improvement seems a distinct possibility assisted by sporting and other events eg Olympics, Euro 2012 and the Queen’s diamond Jubilee – certainly the admen are looking forward to a healthy summer. In three of the last instances when registrations have increased for 2 consecutive quarters GDP has been in positive territory thereafter!
Now on to this double dip malarkey!
The previous recession ended in Q3 of 2009 that’s two and a half years ago. Now until we achieve utopia, and eliminate recessions altogether then, as night follows day, another one is inevitable, be it in 2.5, 5, 10, or however many, years time.
A couple of Americans (Ken Fisher & Lara Hoffmans) in their book Markets Never Forget discuss double dips & sort of conclude that “ … twelve months or less seems fair ” otherwise longer/indeterminate intervals lead to “ ….2007 to 2009 could be the fourteenth dip of the 1930’s Great Depression, a decaquadruple dip!”
We go with 12 months or more appropriately 4 quarters – so no double dip please!