UK GDP is revised up, but the US goes the other way.
Back in July, when second-quarter GDP growth came in at an astonishing 1.1%, a few grumpy commentators insisted the data couldn't be trusted. There would be a revision, they warned.
Well, it turns it turns out they were right, but not in the way they expected. The Office for National Statistics has now revised its estimate of UK GDP growth for the second quarter even higher -- to 1.2%!
The upward revision is largely thanks to higher than expected construction output adding some 0.1% to GDP. Other bright spots include household expenditure up 0.7% on the quarter -- reversing a 0.1% fall in Q1 -- as well as firms running up inventories for the first time since late 2008.
True, growth in services output was revised down (though this was mainly due to the impact of the freak Iceland ash cloud on airfreight). In a sign of things to come, Government spending was weaker, too.
How to back Britain
It seems to me that the two-faced Matrix economy -- where data is strong but investors and the media lurch from gloomy to suicidal -- remains the order of business in Blighty.
Nothing in today's revision will change the opinion of those who think the global recovery is a fool's chimera, or that the Coalition's austerity measures will throttle the recovery at birth.
Equally, optimists will look past the admittedly weak net trade figures to brighter ONS data stating that, at 15.5% year-on-year, UK exports grew at the fastest rate in the second quarter in 30 years, as the weak pound finally delivers a long-awaited export boom.
If you're in the first camp, you'd better kept buying gilts, albeit at pitiful yields of less than 3%.
The rest of us though could consider the following trio of UK-focused shares that should benefit if the recovery remains on track.
1. Lloyds Banking Group
Ever volatile, shares of Lloyds Banking Group (LSE: LLOY) shares are 20% higher since I pointed out last year that they were one massive bet on a UK housing market recovery.
As the UK economy strengthens, so will house prices -- and with almost a third of the market, so will Lloyds' balance sheet. Concerns about further writedowns on UK commercial property should also abate if the economy continues to recovery (though Irish property remains a thorn in Lloyds' side).
At 67.5p, the black horse is one that every UK optimist should back.
2. Berkeley Group
I've written before about the housebuilder and urban regenerator Berkeley Group (LSE: BKG), and even though the shares have been up and down since then I make no apologies for bringing it up once more.
True, final results in June revealed profits and revenues were both down -- although significantly higher than analysts had been expecting at the start of 2010 -- but I think it amounted to a very credible performance given the circumstances. Cash is still piling up at Berkeley, too, despite the company using £25 million to buy back shares to settle share scheme awards.
Berkeley's business is overwhelmingly in London and the South East, which looks best placed to shrug off public spending cuts -- provided the economy holds up overall. In the last year it has added 2,200 new plots to its impressive land bank, including prime locations such as Belgravia and Wimbledon.
The company claims net assets per share of 637p, compared to a share price of 816p, so there's plenty of protection. It's entirely focused on the UK, and should do very well if the economy does better than expected.
3. JD Sports
While JD Sports (LSE: JD) has made a couple of modest overseas acquisitions in recent years, it remains overwhelmingly outfitter to a certain kind of British youth. (Or should I say 'yoof'?)
Now, you might not think it surprising that the younger fashion-orientated crowd has shrugged off unemployment and economic certainty -- after all, it's a demographic more interested in keeping up appearances than pension and mortgage payments.
But such spendthrifts didn't prevent JD's rivals like JJB Sports and Sports Direct lurching from one crisis to another, even as the former's brand-led approach helped it continue to grow both revenues and profits.
In fact, analysts seem more worried about tough comparables with previous years than any future economic uncertainty.
Earnings per share growth of 10% to January 2011 looks reasonable for any company on a forward P/E of 8, let alone one that has posted blockbuster annual growth regularly in excess of 20% for years.
If a stronger-than-expected UK economy staves off JD Sports' going ex-growth (perhaps aided by the Canterbury rugby brand it acquired last year) then its shares will look cheap indeed.
UK breezes along, but US catches a cold
Finally, if you're struggling to weigh your fear of a slowdown against the apparent bargains in the market, spare a thought for our cousins over the pond.
GDP growth for the second quarter in the US has just been revised down heavily from 2.4% to merely 1.6%. That's massively down on the 3.7% seen in the first quarter.
Ironically, from the rest of the world's perspective the revision may not be so bad, at least in the short term, since much of it was due to a surge in imports that vastly outweighed exports.
The resultant trade deficit shaved 3.4% off US GDP growth, but the countries selling to US customers won't be complaining!
More on the markets:
> Owain owns shares in Lloyds and Berkeley Group.
> For two weeks in September we will be opening the doors of our Champion Shares PRO newsletter service. In order to keep our exclusivity, only a select number of our readership will be able to join us. This is your chance to guarantee your place! Click here to join the priority waiting list.
