TV pundits got terribly excited the other day when it was announced that the headline GDP growth rate for the last quarter of 2009 was 0.3 per cent rather than the 0.1 per cent that the government originally estimated.
So what, you may say – but upon such small adjustments are big decisions all too often made. I was surprised to learn that this latest estimate of fourth quarter GDP is based on 77 per cent of the data, compared with 41 per cent available last month. We won’t actually know the true figure until all the data is in at the end of March.
Perhaps the most significant fact to emerge from these statistics was that the level of inventories fell by £2.8 billion during this quarter. And this was happening at a time when manufacturing output was rising.
The report by the Office for National Statistics says that the decline in manufacturing stocks slowed and work in progress started to increase. All in all it reckons that the past five quarters have seen the deepest period of de-stocking on record.
The question is: is this simply a tactical response to the recession or does it reflect a strategic restructuring of supply chains for a long-term improvement in performance.
For many, no doubt, the tactical consideration has been overwhelming. When cash is king no-one wants to be caught with excess stock. But there must also be some that have taken the strategic decision to move to a leaner supply chain model.
The full picture will become clearer over the next few months – a rise in the level of inventories seems likely but is anyone brave enough to bet on how big it will be?