Wednesday February 22 2017
UK Annual GDP Growth Revised Down To 2% In Q4
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

UK's gross domestic product expanded 2 percent year-on-year in the fourth quarter of 2016, the same as in the previous period and below the preliminary estimate of 2.2 percent. Fixed investment and household consumption were the main drivers of growth while business investment contracted for the fourth straight period.

On the expenditure side, gross fixed capital formation rebounded (0.9 percent after showing no growth in Q3) and both household expenditure (3.2 percent from 2.9 percent) and government spending (0.6 percent from 0.2 percent) rose at a faster pace; while business investment contracted for the fourth straight period (-0.9 percent from -2.3 percent in Q3).

Exports fell 0.4 percent, following a 1.4 percent gain in Q3; while imports grew 1.7 percent, after rising by 4.2 percent the previous period.

On the production side, the service industries expanded 3.1 percent (3.3 percent in Q3), as output rose for: Distribution, hotels and restaurants (5.9 percent from 5.1 percent in Q3); transport storage and communications (4.5 percent from 4.8 percent); business services and finance (2.6 percent from 3.1 percent); and government and other services (1.4 percent from 1.7 percent). Industrial production rose at a faster 1.9 percent (1.2 percent in Q3), as growth accelerated for: manufacturing (1.9 percent from 0.8 percent in Q3); electricity, gas, steam and air conditioning supply (4.5 percent from -0.8 percent); and water supply, sewerage, waste management and remediation activities (6.7 percent from 5.1 percent). By contrast, mining and quarrying, including oil and gas extraction, shrank 2.9 percent (2.1 percent in Q3) . Construction expansion slowed to 0.9 percent from 1.6 percent in Q3, and agriculture output continued to fall (-3.6 percent from -4.2 percent in Q3).

Looking at 2016 as a whole, growth slowed to 1.8 percent from 2.2 percent in 2015 and 3.1 percent in 2014. Fixed investment and government spending slowed while household consumption grew further.




Wednesday February 22 2017
UK Q4 GDP Growth Revised Up To 0.7%
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy advanced 0.7 percent on quarter in the three months to December of 2016, following a 0.6 percent expansion in the previous period and above the preliminary estimate of 0.6 percent, due to upward revisions within the manufacturing industries. On the expenditure side, exports rebounded sharply while household expenditure rose at a slower pace and business investment contracted.

From the expenditure side, the positive contribution to GDP came from net trade (1.3 percentage points), and household final consumption expenditure (0.4 percentage points). In contrast, gross capital formation subtracted 1.1 percentage points from the growth.

Exports jumped by 4.1 percent, following a 2.6 percent drop in the previous period, while imports shrank 0.4 percent following a 1.3 percent gain. As a result, the trade deficit narrowed to £11.0 billion from £17.2 billion in Q3. 

Total domestic expenditure decreased by 0.6 percent, after expanding by 1.7 percent in the previous period, as business investment shrank 1 percent (from 0.7 percent in Q3) while gross fixed capital formation showed no growth (from 0.9 percent). Meanwhile, household expenditure advanced by 0.7 percent (from 0.9 percent in Q2); and government spending rebounded 0.2 (from a flat reading). The level of inventories rose by £1.5 billion, following an increase of £0.4 billion in the previous period. 

From the production side, the service industries increased by 0.8 percent following a 1 percent gain in Q3 and marking the 16th consecutive quarter of growth. Output rose for: Distribution, hotels and catering (2 percent from 1.2 percent in Q3); transport, storage and communication (1 percent from 2.7 percent); business services and finance (0.5 percent from 0.7 percent); and government and other services (0.4 percent, the same as in Q3). Industrial output increased by 0.3 percent (-0.4 percent in Q3), as output expanded for: manufacturing (1.2 percent from -0.8 percent in Q3); electricity, gas, steam and air conditioning supply (3.1 percent from -4.4 percent); and water supply and sewerage (2 percent from -0.1 percent). By contrast, output from mining and quarrying (including oil and gas extraction) contracted by 7 percent (4.5 percent in Q3). Construction output advanced by 0.2 percent, following a 0.8 percent fall the previous period; and agriculture grew 1 percent, the first increase in four quarters.

Compared to the same period of 2015, the economy expanded 2 percent, the same as in the previous period.

Looking at 2016 as a whole, growth slowed to 1.8 percent from 2.2 percent in 2015 and 3.1 percent in 2014.




Wednesday February 15 2017
UK Unemployment Rate Unchanged At 11-Year Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

UK unemployment rate held at an 11-year low of 4.8 percent in the period between October and December 2016, in line with market expectations. The employment rate hit a new all-time high of 74.6 percent as the number of people in work rose by 37 thousand while wage growth slowed.

Estimates from the Labour Force Survey show that, between July to September 2016 and October to December 2016, the number of people in work increased, the number of unemployed people was little changed, and the number of people aged from 16 to 64 not working and not seeking or available to work (economically inactive) decreased.

There were 1.60 million unemployed people (people not in work but seeking and available to work), little changed compared with July to September 2016 but 97,000 fewer than for a year earlier. There were 877,000 unemployed men, little changed compared with July to September 2016 but 48,000 fewer than for a year earlier. There were 720,000 unemployed women, little changed compared with July to September 2016 but 50,000 fewer than for a year earlier. The unemployment rate was 4.8 percent, down from 5.1 percent for a year earlier. It has not been lower since July to September 2005. The unemployment rate is the proportion of the labour force (those in work plus those unemployed) that were unemployed.

There were 31.84 million people in work, 37,000 more than for July to September 2016 and 302,000 more than for a year earlier. There were 23.29 million people working full-time, 218,000 more than for a year earlier. There were 8.55 million people working part-time, 84,000 more than for a year earlier. The employment rate (the proportion of people aged from 16 to 64 who were in work) was 74.6 percent, the highest since comparable records began in 1971.

There were 8.86 million people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 31,000 fewer than for July to September 2016 and 61,000 fewer than for a year earlier. The inactivity rate (the proportion of people aged from 16 to 64 who were economically inactive) was 21.6 percent, slightly lower than for July to September 2016 (21.7 percent) and lower than for a year earlier (21.8 percent).

Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.6 percent, both including and excluding bonuses, compared with a year earlier.




Tuesday February 14 2017
UK Inflation Rate Rises To Highest Since June 2014
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer prices in the United Kingdom rose by 1.8 percent in the year to January 2017, following an 1.6 percent gain in the previous month but below market expectations of 1.9 percent increase. Still, it was the highest inflation rate since June 2014, mainly boosted by rising cost of fuel.

Main upward pressure came from: Transportation (5.7 percent from 3.7 percent in December) boosted by motor fuels (16.8 percent from 10 percent); recreation and culture (0.9 percent, the same as in December); restaurants and hotels (3 percent from 2.8 percent); housing and utilities (0.6 percent from 0.4 percent); and miscellaneous goods and services (0.8 percent from 1 percent).

By contrast, prices of food and non-alcoholic beverages fell 0.5 percent, the smallest drop since July 2014, following a 1.1 percent decline in December.

On a monthly basis, consumer prices went down 0.5 percent after rising by 0.5 percent in December and in line with market consensus. Prices fell sharply for: Clothing and footwear (-4.2 percent); furniture, household equipment and maintenance (-2.5 percent); recreation and culture (-0.7 percent); and transport (-0.6 percent).

The core index which excludes prices of energy, food, alcohol and tobacco increased by 1.6 percent on the year, the same as in December and below market consensus of 1.8 percent gain.




Friday February 10 2017
UK Trade Deficit Narrows On Higher Exports In December
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK’s deficit on trade in goods and services narrowed by £0.3 billion to £3.3 billion in December 2016 from a downwardly revised £3.6 billion in the previous month. Exports rose by 2.4 percent to an all-time high of £48.8 billion, while imports increased at a slower 1.7 percent also to a record £52.1 billion.

In December 2016, exports of goods and services increased by 2.4 percent from the previous month to an all-time high of £48.8 billion, mainly due to an increase in exports of goods to non-EU countries of £1.1 billion. Sales rose for erratic commodities, in particular non-monetary gold and aircraft; non-ferrous and other metals; and chemicals. 

Imports rose by 1.7 percent also to a record high of £52.1 billion, boosted by increases in the imports of material manufactures, including non-ferrous metals, iron and steel; machinery; road vehicles other than cars; and miscellaneous finished manufactures, including jewellery. By contrast, the imports of oil and chemicals fell.

In the fourth quarter of 2016, the deficit on goods and services narrowed by £5.6 billion to £8.6 billion from £14.1 billion in the previous period. This reflects an increase in exports in goods of £7.8 billion, mainly due to an increase in exports of goods to non-EU countries, while imports rose at a slower £2.2 billion. Exports of goods to non-EU countries rose by 17.3 percent to £43.8 billion. There was a smaller increase of 3.5 percent for exports to the EU, to £38.3 billion for the same period. Imports of goods from EU countries increased by 4.1 percent to £63.6 billion, with increases across all commodity groups. Imports to non-EU countries fell by 2.9 percent to £51.1 billion over the same period.

Considering 2016 full year, the total trade deficit widened to £39.4 billion from £29.8 billion in 2015, as imports increased more than exports. Purchases of goods and services went up by 6.4 percent to £582.3 billion from £547.2 billion the previous year, mainly due to higher imports of goods, with 61.2 percent of this rise coming from EU countries. Exports rose by 4.9 percent to £542.9 billion from £517.4 billion in 2015.




Thursday February 02 2017
UK Leaves Monetary Policy Unchanged
Bank of England | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Bank of England Monetary Policy Committee voted unanimously to hold the Bank Rate at a record low of 0.25 percent and to leave the stock of purchased assets at £435 billion on February 2nd, 2017, saying inflation is likely to return to around the 2 percent target by February and then rise above it over the following months.

Excerpts from the Monetary Policy Summary:

The Committee’s latest economic projections are contained in the February Inflation Report. The MPC has increased its central expectation for growth in 2017 to 2.0% and expects growth of 1.6% in 2018 and 1.7% in 2019. The upgraded outlook over the forecast period reflects the fiscal stimulus announced in the Chancellor’s Autumn Statement, firmer momentum in global activity, higher global equity prices and more supportive credit conditions, particularly for households. Domestic demand has been stronger than expected over the past few months, and there have been relatively few signs of the slowdown in consumer spending that the Committee had anticipated following the referendum. Nevertheless, continued moderation in pay growth and higher import prices following sterling’s depreciation are likely to mean materially weaker household real income growth over the coming few years. As a consequence, real consumer spending is likely to slow.

The value of sterling remains 18% below its peak in November 2015, reflecting investors’ perceptions that a lower real exchange rate will be required following the UK’s withdrawal from the EU. Over the next few years, a consequence of weaker sterling is that the higher imported costs resulting from it will boost consumer prices and cause inflation to overshoot the 2% target. This effect is already becoming evident in the data. CPI inflation rose to 1.6% in December and further substantial increases are very likely over the coming months. In the central projection, conditioned on market yields that are somewhat higher than in November, inflation is expected to increase to 2.8% in the first half of 2018, before falling back gradually to 2.4% in three years’ time. Inflation is judged likely to return to close to the target over the subsequent year. 

Attempting to offset fully the effect of weaker sterling on inflation would be achievable only at the cost of higher unemployment and, in all likelihood, even weaker income growth. For this reason, the MPC’s remit specifies that in such exceptional circumstances the Committee must balance the trade-off between the speed with which it intends to return inflation to the target and the support that monetary policy provides to jobs and activity. At its February meeting, the MPC continued to judge that it remained appropriate to seek to return inflation to the target over a somewhat longer period than usual, and that the current stance of monetary policy remained appropriate to balance the demands of the Committee’s remit.

As the Committee has previously noted, however, there are limits to the extent that above-target inflation can be tolerated. The continuing suitability of the current policy stance depends on the trade-off between above-target inflation and slack in the economy. The projections described in the Inflation Report depend in good part on three main judgements: that the lower level of sterling continues to boost consumer prices broadly as expected, and without adverse consequences for expectations of inflation further ahead; that regular pay growth does indeed remain modest, consistent with the Committee’s updated assessment of the remaining degree of slack in the labour market; and that the hitherto resilient rates of household spending growth slow as real income gains weaken. Monetary policy can respond, in either direction, to changes to the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target.




Thursday January 26 2017
UK Economy Grows 2.2% YoY In Q4
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy expanded by 2.2 percent year-on-year in the fourth quarter of 2016, the same pace as in the previous period and beating market expectations of 2.1 percent growth, the preliminary estimate showed. Total production increased further, boosted by manufacturing and utilities while services and construction advanced at a slower pace. Looking at 2016 as a whole, growth slowed modestly to 2 percent from 2.2 percent in 2015 and 3.1 percent in 2014.

Total production increased 1.5 percent after rising 1.1 percent in Q3. Within the production aggregate output grew for: manufacturing (+1 percent from +0.5 percent in Q3); electricity, gas, steam and air conditioning supply (+5 percent from -1.1 percent in Q3); and water supply, sewerage, waste management and remediation activities (+6.4 percent from +5.2 percent in Q3). However, these positive growths were offset by a 1.3 percent decrease in mining and quarrying (from +3.6 percent in Q3).

Services advanced 3 percent, following a 3.1 percent growth in Q3. Within the services aggregate output expanded for: distribution, hotels and restaurants (+5.4 percent from +5 percent in Q3); transport, storage and communications (+3.3 percent from +4.2 percent in Q3); business services and finance (+3 from +3.1 percent in Q3); government and other services (+1.2 percent from 1.6 percent in Q3).


Construction output was estimated to have increased by 0.8 percent, following a gain of 1.7 percent during Q3.

Agriculture output continued to contract (-1.6 percent from -1.7 percent in Q3).

Looking at 2016 as a whole, growth slowed modestly to 2 percent from 2.2 percent in 2015 and 3.1 percent in 2014. Output rose at a slower pace for total production (+1.1 percent from +1.2 percent) and construction (+1.4 percent from +4.9 percent); while agriculture contracted (-0.6 percent from +1.2 percent). Meanwhile, services industries expanded further (+2.8 percent from +2.6 percent).


Thursday January 26 2017
UK GDP Growth Beats Expectations In Q4
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK economy advanced 0.6 percent on quarter in the three months to December of 2016, the same pace as in the previous period and better than market expectations of a 0.5 percent expansion, preliminary estimates showed. Services industries were the main drivers of growth, with a strong contribution from retail sales and travel agency services. Meanwhile, construction recovered slightly and production industries showed no growth, as a sharp contraction in mining and oil production offset a rebound in manufacturing and utilities.

The services aggregate grew 0.8 percent and was the sole contributor to the quarter-on-quarter percentage change in GDP to 2 decimal places. Production (no growth), construction (+0.1 percent) and agriculture (+0.4 percent) each contributed 0.00 percentage points to the headline figure.

Within the services aggregate, the distribution, hotels and restaurants industry increased by 1.7 percent (+1.7 percent in Q3) and contributed 0.24 percentage points to growth. Retail trade, wholesale trade and the trade and repair of motor vehicles were all strong performers. The business services and finance industries also performed strongly, increasing by 0.9 percent (+0.9 percent in Q3) and contributing 0.28 percentage points to growth. A particularly strong performer was the travel agency industry, which increased by 7.3 percent, contributing 0.05 percentage points to headline GDP growth. Growth in transport, storage and communications slowed to 0.3 percent (+2.6 percent in Q3), mainly due to a fall back in the motion picture and computer programming and consultancy industries. The government and other services industry grew 0.4 percent (+0.4 percent in Q3).

Within the production aggregate: manufacturing increased by 0.7 percent (-0.8 percent in Q3), mainly due to a large rise in the erratically performing pharmaceuticals industry; electricity, gas, steam and air conditioning supply increased by 3.9 percent (+3.9 percent in Q3); and water supply, sewerage, waste management and remediation activities increased by 1.7 percent (+1.7 percent in Q3). However, these positive growths were offset by a 6.9 percent decrease in mining and quarrying. This was the largest fall since Q4 2012, when it fell by 9.2 percent. The Department for Business, Energy and Industrial Strategy advised the decrease can largely be attributed to continued maintenance to the Buzzard oil field in the North Sea. 

Construction output was estimated to have increased by 0.1 percent, following a fall of 0.8 percent during Q3.

Agriculture output expanded 0.4 percent after three consecutive quarters of decline.  Agriculture is the smallest of the main industrial groups with a weight of less than 1 percent in the output measure of GDP. 

Looking at 2016 as a whole, growth slowed modestly to 2 percent from 2.2 percent in 2015 and 3.1 percent in 2014.


Wednesday January 18 2017
UK Unemployment Rate Steady At 11-Year Low Of 4.8%
ONS | Joana Taborda | joana.taborda@tradingeconomics.com

UK jobless rate remained at 4.8 percent in the three months to November of 2016, the same as in the previous period and in line with market expectations. The employment rate held at an all-time high of 74.5 percent and wages grew at a faster pace while the number of people in work fell by 9,000.

There were 1.60 million unemployed people, 52,000 fewer than for June to August 2016 and 81,000 fewer than for a year earlier. There were 883,000 unemployed men, 8,000 fewer than for June to August 2016 and 41,000 fewer than for a year earlier. There were 721,000 unemployed women, 44,000 fewer than for June to August 2016 and 40,000 fewer than for a year earlier.

31.80 million people in work, 9,000 less than in June to August 2016 but 294,000 more than for a year earlier. 23.25 million were working full-time, 209,000 more than for a year earlier. There were 8.55 million people working part-time, 86,000 more than for a year earlier.

The employment rate  was 74.5 percent, virtually unchanged compared with June to August 2016 but higher than for a year earlier (74 percent). 

There were 8.89 million people aged from 16 to 64 who were economically inactive, 85,000 more than for June to August 2016 but 63,000 fewer than for a year earlier. The inactivity rate was 21.7 percent, higher than for June to August 2016 (21.5 percent) but lower than for a year earlier (21.9 percent).

Average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.8% including bonuses and by 2.7% excluding bonuses compared with a year earlier.


Tuesday January 17 2017
UK Inflation Rate Highest Since 2014
ONS | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in the United Kingdom rose 1.6 percent year-on-year in December of 2016, higher than 1.2 percent in November and above market expectations of 1.4 percent. It is the highest inflation rate since July of 2014, boosted by rising cost of transport and housing and utilities amid a weaker pound.

Main upward pressure came from prices of transport (3.7 percent compared to 2.5 percent in November), housing and utilities (0.4 percent from 0.2 percent), recreation and culture (0.9 percent from 0.7 percent) and restaurants and hotels (2.8 percent from 2.6 percent). Prices of food and non-alocoholic beverages fell 1.1 percent, the least since August of 2014. 

On a monthly basis, consumer prices increased 0.5 percent, following a 0.2 percent gain in November and beating expectations of a 0.3 percent increase. It is the highest monthly inflation since February of 2014, boosted by transport prices (+2.9 percent), namely air fares (+49 percent). Food cost increased 0.8 percent and fuel prices fell less (-0.4 percent). 

The core index which excludes prices of energy, food, alcohol and tobacco advanced 1.6 percent on the year, above 1.4 percent in November and expectations of 1.4 percent. It is the highest reading since August of 2014.