The recessionary condition of the economy seems to have intensified more rapidly than we expected in the first three months of the year. Although the range of data available for constructing the first quarter's national accounts is smaller and its quality less reliable than usual, owing to the postal strike, it seems clear that total output dropped, very probably by quite a large amount, in the first quarter. Of particular importance in this connection is the probability that the high rate of stockbuilding which was recorded for the second half of last year represented an involuntary excess accumulation of goods, and that stockbuilding has subsequently dropped right back. This is certainly what one would expect to happen, and there is some confirmation of it available in recent business survey results.

Developments in the world economy have on the whole been much as we predicted in February. It is becoming increasingly clear that renewed expansion is under way in the United States at a pace which, even if it falls short of the Administration's hopes, is more than compensating for the slowing down in industrial countries outside North America. This deceleration has become quite marked in Japan as well as Western Europe, but we expect a faster pace to be resumed before the end of the year. We still put real growth in OECD countries at around 4 per cent in 1971, unless there is a prolonged steel strike in the United States. This compares with about 2½ per cent last year, and we expect the rising trend to continue into 1972.

The Reddaway Report on the distributive trades argued that the imposition of SET had favourable effects upon productivity in retailing. On the face of it the reduction and ultimate abolition of the tax could be expected to be followed by correspondingly large adverse productivity effects. For a number of reasons, however, we doubt whether such an inference is justified.

Over the past 15 years, manufactures have been the fastest-growing sector of Britain's import trade. In 1969, the dollar value of total retained imports was 75 per cent higher than the 1955 figure but the dollar value of imports of manufactures was more than 260 per cent greater than in 1955. The latter rise owed little to higher prices; there was a more than threefold increase in volume. Thus manufactures which had in 1955 supplied just under 23 per cent of retained imports accounted for 43 per cent in 1969.

This note outlines some of the problems in measuring short-run changes in manpower costs and lists some of the statistical series now available for major industrial countries. Information about changes in the cost of labour provides a useful complement to data about export prices for analysis of the development of a country's competitive position. Each type of indicator has its own drawbacks. For example, for some exports prices are set by competitive world markets and a change in competitiveness may take the form of a change in relative profits rather than a change in price. Moreover, there are well-known difficulties in comparing national indices for prices or unit/average values. For production costs per unit of output, too, there are problems of compilation. There are also problems of interpretation, particularly over very short periods, because the measures can be very erratic. In the field of unit costs it has become usual to focus attention on changes in manpower costs, variously defined, partly because such costs are the most important, and partly because costs of materials (to the extent that they are set by world prices) tend to move more closely in line as between different countries.

In this issue we introduce a new table on selected indicators of industrial countries (table 18); this amalgamates the old tables 18 and 19. It includes the earlier series on consumer prices, demand for labour, and unemployment in an unchanged form. Detailed definitions of these series were given in National Institute Economic Review no. 50, November 1969, page 67.