What if things aren’t what they seem?
“There’s nothing quite so disabling to a government, industry, or individual business, as bad data,” says Mike Rigby of MRA Research. “It helps create false narratives and leads us in the wrong direction. Bad data is very expensive. Good data is the foundation for good decisions.”
What if the “spiralling economic inactivity… with 2.8 million people locked out of work due to long-term sickness” problem that the Government promises to fix with its ‘get Britain working’ pledge, isn’t the problem they think it is? And what if the apparent rise since 2019 in the share of working-age Britons neither in work nor looking for a job is partly an illusion?
To be fair, misleading statistics are not just a problem for the UK. But the headlines summed up the general feeling: Dodgy data misleads policymakers, businesses and investors. Fuzzy job numbers need fixing. The Resolution Foundation claimed that the Office for National Statistics (ONS) may have lost almost a million workers from its job stats since 2019, undermining the ‘missing workers’ narrative that’s been the basis of several policy pledges from the UK government, as well as interest rate decisions by the Bank of England.
What if Britain is not the sick man of Europe? What if the GDP figures that this perception was based on were wrong and, restated, show that Britain has been doing better than comparable economies? On 29 September 2023, the ONS published revisions showing a shallower contraction in GDP in 2020 and a faster recovery in 2021, due to uncertainty in estimates of GDP during the pandemic. So, GDP was revised by +2.0%. Two percent may sound trivial but it, and adjustments by other countries, was enough to move the UK from the back of the queue to the front. The national media were stunned and suspicious, because it undermined how the media and politicians thought about Britian.
Official statistics are regularly revised, as better data becomes available, but once they hit the headlines, revisions rarely get attention. Yet they should, because sometimes revisions can change down into up, and black into white. We see this with ONS RMI data. BMBI is reckoned to be “the best proxy there is for RMI”, because it’s based on a panel that includes 88% of builders’ merchants’ sales to builders and trades. The ONS data is based on a much smaller survey. Moreover, when it reports, less than half the results may be in, and the numbers are revised over 12-18 months as data trickles in. Revisions vary, but we’ve seen a -2% movement reported by the ONS revised up gradually over 18 months to +2%. It then matched the +2% figure BMBI had reported 18 months previously. The problem with that is users don’t know or have the time to look, and what sticks in their mind is the incorrect number we all read in the original press report, not the final revision 18 months later.
Bad GDP numbers create false narratives and distort our world view. Employment numbers underpin tax and welfare spending, and the Bank of England’s assessment of how hot the economy is. Businesses use ONS and BMBI data for the timing of investments.
Statistics matter. Good data, research and insights improve the quality and timing of business decisions and marketing.
This article was first published in the Builders Merchants News magazine.
