Friday December 09 2016
UK Trade Deficit Narrows Sharply As Exports Jump 4.6%
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The trade deficit in the United Kingdom narrowed by £3.8 billion to £2.0 billion in September 2016 from an upwardly revised £5.8 billion in the previous month. It was the smallest trade gap since May this year, as exports increased by 4.6 percent, boosted by a 8.7 percent rise in the export of goods, while imports declined by 3.6 percent.

Between September 2016 and October 2016, total exports (goods and services) increased by £2.0 billion, or 4.6 percent, to £46.4 billion, boosted by a £2.1 billion, or 8.7 percent, increase in the export of goods. Total imports (goods and services) decreased by £1.8 billion, or 3.6 percent, to £48.4 billion over the same period, reflecting a £2.0 billion, or 5.2 percent, decrease in the import of goods.

The deficit on trade in goods was £9.7 billion in October 2016, narrowing by £4.1 billion from September 2016. Exports of machinery and transport equipment, and unspecified goods increased by £0.6 billion each, with material manufactures and chemicals increasing by £0.3 billion each.

Between September 2016 and October 2016, exports of goods to EU countries increased by £0.2 billion, or 1.5 percent, to £12.4 billion, mainly reflecting an increase in exports of miscellaneous manufactures (£0.2 billion) and material manufactures (£0.1 billion). These rises were offset by a decrease in fuels (£0.2 billion). Imports of goods from EU countries decreased by £0.3 billion to £20.5 billion in October 2016; there were decreases in imports of machinery and transport equipment of (£0.4 billion) offset by rises in imports of food, beverages and tobacco (£0.1 billion).

Between September 2016 and October 2016, exports of goods to countries outside the EU increased by £2.0 billion, reflecting a rise in unspecified goods (£0.6 billion), machinery and transport equipment (£0.5 billion), chemicals (£0.3 billion) and fuels (£0.2 billion). Imports of goods from countries outside the EU decreased by £1.7 billion, reflecting falls in imports of machinery and transport equipment (£1.1 billion), material manufactures (£0.4 billion) and miscellaneous manufactures (£0.3 billion). The deficit with non-EU countries in October 2016 was £1.6 billion.

Between the 3 months to July 2016 and the 3 months to October 2016, the total trade deficit (goods and services) widened by £4.7 billion to £13.2 billion. The trade position reflects exports minus imports; the widening of the deficit reflected a greater rise in imports (+ 5 percent) than the rise in exports (+1.8 percent). Both total trade exports and imports reached 3-monthly highs in the 3 months to October 2016 of £135.5 billion and £148.7 billion respectively.




Friday November 25 2016
UK GDP Annual Growth Confirmed at 1-Year High
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

UK's gross domestic product expanded 2.3 percent year-on-year in the third quarter of 2016, accelerating from a 2.1 percent growth in the previous period and in line with preliminary estimate. It was the strongest reading since the second quarter of 2015, boosted by net external demand and gross fixed capital formation.

On the expenditure side, net external demand contributed positively, as exports advanced 4.1 percent, following a 3.1 percent gain in Q2; while imports grew at a slower 2.6 percent, after rising by 4.7 percent the previous period. 

Gross fixed capital formation continued to grow (+1.2 percent from +1 percent in Q2), but business investment contracted (-1.6 percent from -0.8 percent in Q2). Meanwhile, growth slowed for both household consumption (+2.6 percent from +3 percent in Q2) and government spending (+0.8 percent from +1.1 percent).

On the production side, the service industries expanded 3 percent (+2.7 percent in Q2), mainly boosted by distribution, hotels and restaurants (+5.2 percent from +5 percent in Q2), transport storage and communications (+4.2 percent from +2.5 percent in Q2); and government and other services (+1.9 percent from +1.5 percent in Q2). Industrial production rose at a slower 1 percent (+1.6 percent in Q2), as growth slowed for: manufacturing (+0.5 percent from +1 percent in Q2). Construction edged up 0.1 percent, following a 0.4 percent gain in Q2.




Friday November 25 2016
UK Q3 GDP Growth Confirmed at 0.5%
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy advanced 0.5 percent on quarter in the three months to September of 2016, slowing from a 0.7 percent expansion in the previous period and in line with the preliminary estimate. Net external demand was the main driver of growth, while household expenditure and fixed investment rose at a slower pace.

From the expenditure side, the largest positive contribution to GDP came from net trade, which contributed a positive 0.7 percentage points, and household final consumption expenditure, which contributed a positive 0.4 percentage points.

The trade balance deficit narrowed to £12.4 billion from £15.7 billion in Q2. Exports increased by 0.7 percent, following a 1 percent drop in the previous period, while imports shrank 1.5 percent following a 1.3 percent gain. 

Total domestic expenditure decreased by 0.2 percent, after expanding by 1.4 percent in the previous period. Household expenditure (+0.7 percent from +0.9 percent in Q2), government spending (+0.4 percent from flat reading); and gross fixed capital formation (+1.1 percent from +1.6 percent), of which business investment (+0.9 percent) grew. Meanwhile, non-profit institutions serving households’ consumption contracted (-0.4 percent from +1.7 percent) and the level of inventories increased by £3.1 billion, following an increase of £3.0 billion in the previous period. 

From the production side, the service industries increased by 0.8 percent following a 0.6 percent gain in Q2 and marking the 15th consecutive quarter of positive growth. Output rose for: Distribution, hotels and catering (+1.1 percent, the same as in the previous period); transport, storage and communication (+2.3 percent from +0.6 percent); business services and finance (+0.3 percent from +0.6 percent); and government and other services (+0.5 percent from +0.1 percent). Industrial output decreased by 0.5 percent (+2.1 percent in Q2), as output declined for: manufacturing (-0.9 percent from +1.6 percent in Q2); electricity, gas, steam and air conditioning supply (-4.3 percent from +4.6 percent); and water supply and sewerage (-0.5 percent from +2.1 percent in Q2). By contrast, output from mining and quarrying (including oil and gas extraction) increased by 4.3 percent (+2.8 percent in Q2). Construction output decreased by 1.1 percent, following a 0.1 percent fall the previous period.

Compared to the same period of 2015, the economy expanded 2.3 percent, the biggest gain since the second quarter of 2015.




Wednesday November 16 2016
UK Unemployment Rate Falls to 11-Year Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

UK jobless rate declined to 4.8 percent in the three months to September 2016 from 4.9 percent in the April to June period and 5.3 percent a year earlier. The figure came in better than market expectations of 4.9 percent to hit the lowest level since July to September 2005, as the number of unemployed went down while the number of people in work increased.

There were 1.60 million unemployed people (people not in work but seeking and available to work), 37,000 fewer than for April to June 2016 and 146,000 fewer than for a year earlier. There were 876,000 unemployed men, 15,000 fewer than for April to June 2016 and 82,000 fewer than for a year earlier. There were 728,000 unemployed women, 22,000 fewer than for April to June 2016 and 64,000 fewer than for a year earlier. The unemployment rate was 4.8 percent, down from 5.3 percent for a year earlier and the lowest 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 31.80 million people in work, 49,000 more than for April to June 2016 and 461,000 more than for a year earlier. There were 23.24 million people working full-time, 350,000 more than for a year earlier. There were 8.56 million people working part-time, 110,000 more than for a year earlier. The employment rate (the proportion of people aged from 16 to 64 who were in work) was 74.5 percent, the joint highest since comparable records began in 1971.

There were 8.89 million people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 49,000 more than for April to June 2016 but 103,000 fewer than for a year earlier. The inactivity rate (the proportion of people aged from 16 to 64 who were economically inactive) was 21.7 percent, down from 22 percent for a year earlier.

Average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.3 percent including bonuses and by 2.4 percent excluding bonuses compared with a year earlier.




Tuesday November 15 2016
UK Inflation Rate Edges Down to 0.9% in October
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

British consumer prices rose 0.9 percent in the year to October 2016, compared with a 1 percent growth in the year to September and below market expectations of 1.1 percent gain. Prices for motor fuels, housing and furniture increased while cost of clothing fell.

Main upward pressure came from: Transportation (+2.3 percent from +1.2 percent in September) boosted by motor fuels (+4.7 percent from +1.4 percent); housing and utilities (+0.3 percent from +0.2 percent); and furniture, household equipment and routine maintenance (+0.1 percent from -1.4 percent). Additional gains came from: recreation and culture (+0.2 percent from +0.8 percent in September); restaurants and hotels (+2.6 percent from +2.9 percent); and miscellaneous goods and services (+1.1 percent from +1.3 percent).

By contrast, prices decreased for: Clothing and footwear (-0.7 percent from +1 percent in September); and food and non-alcoholic beverages (-2.4 percent from -2.3 percent the previous month).

On a monthly basis, consumer prices edged up 0.1 percent, following a 0.2 percent growth in September and missing market consensus of 0.3 percent rise.

The core index which excludes prices of energy, food, alcohol and tobacco advanced 1.2 percent on the year, the smallest gain since May.




Wednesday November 09 2016
UK Trade Deficit Widens Sharply in September
ONS | Joana Taborda | joana.taborda@tradingeconomics.com

The trade gap in the United Kingdom widened by GBP 1.4 billion to GBP 5.2 billion in September from August of 2016, reaching the highest in three months. Exports fell 0.4 percent while imports jumped 2.5 percent, hitting a record high and boosted by purchases of ships, material manufactures, road vehicles and oil.

Total exports decreased by GBP 0.2 billion to GBP 45.4 billion while total imports rose by GBP 1.25 billion to GBP 50.6 billion.

Considering only goods, the trade deficit was GBP 12.7 billion, widening by GBP 1.6 billion from August. The goods deficit with EU countries reached an all time high of GBP 8.7 billion. 

Exports of goods declined 0.8 percent to GBP 26.08 billion: sales to countries outside the EU decreased by GBP 0.3 billion, reflecting a fall in ships and aircraft of GBP 0.2 billion each and unspecified goods, which includes nonmonetary gold, of GBP 0.2 billion. In contrast, shipments of goods to EU countries increased by GBP 0.1 billion or 1.1 percent. 

Imports of goods went up 3.6 percent to GBP 38.7 billion: imports from EU countries increased by GBP 1.0 billion or 5 percent to record GBP 21.3 billion; there were increases in imports of machinery and transport equipment of GBP 0.7 billion, food and live animals of GBP 0.1 billion, oil of GBP 0.1 billion and miscellaneous manufactures of GBP 0.1 billion. Imports of goods from countries outside the EU increased by GBP 0.3 billion, reflecting rises in imports of material manufactures of GBP 0.5 billion, ships of GBP 0.5 billion, oil of GBP 0.2 billion and miscellaneous manufactures of GBP 0.2 billion. These increases were partially offset by a fall in imports of aircraft of GBP 1.0 billion.

Considering the third quarter of 2016, the total trade deficit including both goods and services narrowed by GBP 1.6 billion to GBP 11.0 billion as exports (+3.4 percent) rose faster than imports (2 percent). Both total trade exports and imports reached record 3-monthly highs in Quarter 3 2016 of GBP 136.2 billion and GBP 147.3 billion respectively.

Although the pound fell more than 10% against the USD and the EUR after the Brexit vote, there was little direct evidence so far of currency effects on trade, the ONS said. 



Thursday November 03 2016
UK Leaves Monetary Policy Unchanged
BoE | 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 November 3rd, 2016, in order to meet the 2 percent inflation target, in a way that helps to sustain growth and employment. Meanwhile, the Committee has dropped its plans for another rate cut as the inflation rate is expected to rise way above the central bank's target over the next three years. Policymakers also said rates could move in either direction depending on changes to the economic outlook.

The Committee’s latest projections for output, unemployment and inflation, conditioned on average market yields, are set out in the November Inflation Report. Output growth is expected to be stronger in the near term but weaker than previously anticipated in the latter part of the forecast period. In part that reflects the impact of lower real income growth on household spending. It also reflects uncertainty over future trading arrangements, and the risk that UK-based firms’ access to EU markets could be materially reduced, which could restrain business activity and supply growth over a protracted period. The unemployment rate is projected to rise to around 5½% by the middle of 2018 and to stay at around that level throughout 2019.

Largely as a result of the depreciation of sterling, CPI inflation is expected to be higher throughout the three-year forecast period than in the Committee’s August projections. In the central projection, inflation rises from its current level of 1% to around 2¾% in 2018, before falling back gradually over 2019 to reach 2½% in three years’ time. Inflation is judged likely to return to close to the target over the following year.

The MPC’s Remit requires that monetary policy should balance the speed with which inflation is returned to the target with the support for real activity. Developments since August, in particular the direct impact of the further depreciation of sterling on CPI inflation, have adversely affected that trade-off. This impact will ultimately prove temporary, and attempting to offset it fully with tighter monetary policy would be excessively costly in terms of foregone output and employment growth. However, there are limits to the extent to which above-target inflation can be tolerated.  

Those limits depend, for example, on the cause of the inflation overshoot, the extent of second-round effects on inflation expectations and domestic costs, and the scale of the shortfall in economic activity below potential. In the MPC’s November forecast, the inflation overshoot is the product of a perceived shock to future supply, which has caused the exchange rate to fall, alongside a modest projected shortfall of activity. Inflation expectations have picked up to around their past average levels and domestic costs have remained contained. Given the projected rise in unemployment, together with the risks around activity and inflation, and the potential for further volatility in asset prices, the MPC judges it appropriate to accommodate a period of above-target inflation. That notwithstanding, the MPC is monitoring closely the evolution of inflation expectations.

Earlier in the year, the MPC noted that the path of monetary policy following the referendum on EU membership would depend on the evolution of the prospects for demand, supply, the exchange rate, and therefore inflation. This remains the case. 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 October 27 2016
UK Annual GDP Growth at 1-Year High of 2.3%
ONS | Joana Taborda | joana.taborda@tradingeconomics.com

The UK economy advanced 2.3 percent year-on-year in the three months to September of 2016, better than a 2.1 percent expansion in the previous period and above market expectations of 2.1 percent, preliminary estimates showed. It is the best performance since the second quarter of 2015 and the first GDP figure covering a full quarter following the EU referendum, suggesting growth continues to be broadly unaffected.

Year-on-year, the services sector recorded the biggest gain (3 percent compared to 2.7 percent in Q2). It is the highest growth rate since the first quarter of 2015: distribution, hotels and restaurants increased 5.1 percent (5 percent in Q2); transport, storage and communication rose 4 percent (2.5 percent in Q2) and business services and finances growth was steady at 2.6 percent.

Industrial output expanded at a slower pace (1.2 percent compared to 1.6 percent in Q2), as manufacturing (0.4 percent compared to 1 percent) and water supply and sewerage (5.2 percent compared to 5.3 percent in Q2) eased and electricity, gas, steam and air contracted (-0.7 percent compared to 4.4 percent) while the mining sector expanded at a faster 4.5 percent (1 percent in Q2). 

The agricultural sector contracted for the second quarter (-1.4 percent compared to -0.7 percent in Q2). 

On a quarterly basis, the economy advanced 0.5 percent, following a 0.7 percent expansion in Q2 and beating market expectations of 0.3 percent. 


Thursday October 27 2016
UK GDP Growth Beats Expectations
ONS | Joana Taborda | joana.taborda@tradingeconomics.com

The UK economy advanced 0.5 percent on quarter in the three months to September of 2016, slowing from a 0.7 percent expansion in the previous period but better than market expectations of 0.3 percent, preliminary estimates showed. It is the first GDP figure covering a full quarter following the EU referendum, suggesting growth continues to be broadly unaffected with a strong performance in the services industries offsetting falls in other industrial groups.

The services industries increased by 0.8 percent, contributing 0.64 percentage points to growth, compared with an increase of 0.6 percent in Q2. All 4 of the main services aggregates (distribution, hotels and restaurants; transport, storage and communication; business services and finance; and government and other services) increased although growth in the transport, storage and communication industries was the main reason behind the increase in services growth between the 2 quarters. It increased by 2.2 percent (0.6 percent in Q2), the fastest expansion since Q4 2009, primarily driven by the motion picture, video and TV programme production, sound recording and music publishing activities, and computer programming industries.

Industrial production shrank 0.4 percent, contributing negatively to the expansion (-0.05 percent), following an increase of 2.1 percent in Q2. 3 of the main production aggregates decreased with: manufacturing falling 1.0 percent following an increase of 1.6 percent in Q2; energy supply decreasing by 3.6 percent following an increase of 4.6 percent in Q2 and water and waste management declining by 0.2 percent following an increase of 2.1 percent in Q2. In contrast, mining and quarrying increased by 5.2 percent, following an increase of 2.8 percent in Q2. 

The construction sector contracted 1.4 percent with a downward contribution to quarterly GDP growth of 0.09 percentage points. This follows a decrease of 0.1 percent in Q2 and marks the biggest downward movement in the construction industry since Q3 2012; however, this is in the context of a pattern of growth to Quarter 1 2016 when construction surpassed its pre-downturn peak. 

The agricultural sector also declined 0.7 percent, following a 1 percent contraction in Q2.

Year-on-year, the economy advanced 2.3 percent, higher than a 2.1 percent expansion in Q2 and better than market expectations of 2.1 percent. It is the fastest growth rate since Q2 2015.  


Wednesday October 19 2016
UK Unemployment Rate Holds Steady at 4.9%
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

UK jobless rate remained unchanged at 4.9 percent for the fourth consecutive month in the three months to August 2016, in line with market expectations. It stood at its lowest level in eleven years, as the number of people in work and the number of unemployed people increased, while the number of economically inactive people fell.

There were 1.66 million unemployed people, 10,000 more than for March to May 2016 but 118,000 fewer than for a year earlier. There were 891,000 unemployed men, 12,000 fewer than for March to May 2016 and 81,000 fewer than for a year earlier. There were 765,000 unemployed women, 23,000 more than for March to May 2016 but 37,000 fewer than for a year earlier. The unemployment rate was 4.9 percent, unchanged compared with March to May 2016 but down from 5.4 percent for a year earlier.

There were 31.81 million people in work, 106,000 more than for March to May 2016 and 560,000 more than for a year earlier. There were 23.23 million people working full-time, 362,000 more than for a year earlier. There were 8.58 million people working part-time, 198,000 more than for a year earlier. The employment rate was recorded at 74.5 percent, the joint highest since comparable records began in 1971.

There were 8.81 million people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 65,000 fewer than for March to May 2016 and 231,000 fewer than for a year earlier. The inactivity rate was 21.5 percent, the joint lowest since comparable records began in 1971.

Average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.3 percent both including and excluding bonuses compared with a year earlier.