Wednesday April 12 2017
UK Unemployment Rate Steady At Near 12-Year Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

UK unemployment rate held at an almost 12-year low of 4.7 percent in the three months to February 2017, in line with market expectations. The employment rate stood at an all-time high of 74.6 percent as the number of people in work rose by 39 thousand.

Estimates from the Labour Force Survey show that, between September to November 2016 and the three months to February 2017, the number of people in work increased, the number of unemployed people fell, and the number of people aged from 16 to 64 not working and not seeking or available to work (economically inactive) also fell.

There were 1.56 million unemployed people (people not in work but seeking and available to work), 45,000 fewer than for September to November 2016 and 141,000 fewer than for a year earlier. The unemployment rate was 4.7 percent, down from 5.1 percent for a year earlier. It was the lowest jobless rate 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, 39,000 more than for September to November 2016 and 312,000 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 joint highest since comparable records began in 1971.

There were 8.88 million people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 10,000 fewer than for September to November 2016 and 36,000 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 September to November 2016 (21.7 percent) and for a year earlier (21.8 percent).

Average weekly earnings for employees in nominal terms increased by 2.3 percent including bonuses, and by 2.2 percent excluding bonuses, compared with a year earlier. In real terms (that is, adjusted for price inflation), average weekly earnings increased by 0.2 percent including bonuses, and by 0.1 percent excluding bonuses, compared with a year earlier.




Tuesday April 11 2017
UK Inflation Rate Steady At 3-1/2-Year High
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer prices in the United Kingdom rose by 2.3 percent in the year to March 2017, the same pace as in February and in line with market expectations. The inflation rate remained at its highest level since September 2013, mainly boosted by rising prices for food, alcohol and tobacco, clothing and footwear, and miscellaneous goods and services.

The main upward contributors to change in the annual rate were: Food and non-alcoholic beverages (1.2 percent from 0.2 percent); alcoholic beverages and tobacco (4.9 percent from 2.8 percent); clothing and footwear (0.9 percent from -0.1 percent); and miscellaneous goods and services (1.8 percent from 1.1 percent). Prices also rose for: Transport (4.7 percent from 6.9 percent); recreation and culture (inflation steady at 1.6 percent); restaurants and hotels (2.9 percent from 3.2 percent); and housing, water, electricity, gas and other fuels (1.1 percent from 0.7 percent).

The consumer prices index including owner occupiers’ housing costs (CPIH) also rose by 2.3 percent in March 2017, the same pace as in February.

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, fell to 1.8 percent in March from 2 percent in February and below market consensus of 1.9 percent.

On a monthly basis, consumer prices went up 0.4 percent after rising by 0.7 percent in February and above market expectations of a 0.3 percent gain. Prices rose for recreation and culture (0.4 percent), restaurants and hotels (0.2 percent), housing and utilities (0.1 percent) and food and non-alcoholic beverages (0.4 percent), while cost of transport fell (-0.5 percent).




Friday April 07 2017
UK Trade Deficit Widens On Higher Imports
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK’s deficit on trade in goods and services widened by £0.7 billion to £3.7 billion in February 2017 from an upwardly revised £3.0 billion in January. Imports increased in the month by £0.3 billion to a new record of £52.1 billion, due to an increase in purchases of goods from the EU. Exports decreased by £0.4 billion to £48.5 billion, led by a decrease in exports of trade in services of £0.3 billion.

Imports of goods and services rose by £0.3 billion to a new record high of £52.1 billion from £51.8 billion in the previous month, mainly due to an increase in purchases of erratic goods. Imports of goods from the EU increased by 2.9 percent, mainly from Ireland (26.6 percent), Spain (16.9 percent), Italy (7.3 percent), France (5.8 percent) and Germany (3.1 percent). Imports also rose from Canada (88 percent), Japan (25.6 percent), and the US (5.1 percent); but fell from Norway (-25.2 percent) and China (-3.3 percent). 

Exports of goods and services decreased by £0.4 billion to £48.5 billion in February from £48.8 billion in January, due to a decrease of £0.3 billion in exports of trade in services. Sales of goods also fell, mainly to Sweden (-11.6 percent), Canada (-8.5 percent), the US (-5.7 percent). By contrast, exports rose to Spain (8.7 percent), Japan (3.8 percent), China (3.5 percent) and Ireland (1.3 percent).

On the price front, export prices decreased by 0.5 percent and import prices decreased by 0.9 percent. The value of sterling was 0.8 percent higher in February 2017 compared with the January average. However, it remains 10.4 percent lower when compared with February 2016.

Between the 3 months to November 2016 and the 3 months to February 2017, the total trade deficit (goods and services) narrowed by £0.3 billion to £8.5 billion. The narrowing of the deficit reflected a greater rise in exports (3.1 percent) than the rise in imports (2.7 percent) over the period. This was mainly due to increases in exports of machinery and transport equipment, oil and chemicals.




Friday March 31 2017
UK Q4 GDP Growth Revised Down To 1.9% YoY
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

UK's gross domestic product expanded 1.9 percent year-on-year in the fourth quarter of 2016, following a 2 percent expansion in the previous period and below the second estimate of 2 percent. Fixed investment and household consumption were the main drivers of growth while business investment contracted for the fourth straight 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.

On the expenditure side, gross fixed capital formation rebounded (1 percent after falling 0.1 percent in Q3) and both household expenditure (2.9 percent from 2.6 percent) and government spending (0.4 percent from 0.3 percent) rose at a faster pace; while business investment contracted for the fourth straight period (-0.9 percent from -2.4 percent in Q3).

Exports advanced 0.6 percent, following a 1.9 percent gain in Q3; while imports grew 2 percent, after rising by 5.2 percent the previous period.

On the production side, the service industries expanded 2.9 percent (3.1 percent in Q3), as output rose for: Distribution, hotels and restaurants (6 percent from 5.1 percent in Q3); transport storage and communications (4.4 percent from 4.8 percent); business services and finance (2.3 percent from 2.8 percent); and government and other services (1.2 percent from 1.6 percent). Industrial production rose at a faster 1.9 percent (1.2 percent in Q3), as growth accelerated for: manufacturing (2 percent from 0.9 percent in Q3); electricity, gas, steam and air conditioning supply (5.4 percent from -0.8 percent); and water supply, sewerage, waste management and remediation activities (5.3 percent from 4.9 percent). By contrast, mining and quarrying, including oil and gas extraction, shrank 3 percent (1.8 percent in Q3). Construction output growth accelerated to 2.8 percent from 2.7 percent in Q3, and agriculture output continued to fall (-3.7 percent from -4.3 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 went up at a slower pace while household consumption grew further.




Friday March 31 2017
UK Q4 GDP Growth Confirmed At 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 downwardly revised 0.5 percent expansion in the previous period and in line with a second estimate. Net trade and consumer spending boosted growth while business investment contracted.

From the expenditure side, the positive contribution to GDP came from net trade (1.7 percentage points), and household final consumption expenditure (0.4 percentage points). In contrast, gross capital formation subtracted 1.6 percentage points from growth.

Exports jumped by 4.6 percent, following a 2.1 percent drop in the previous period, while imports shrank 1 percent following a 2.3 percent gain. As a result, the trade deficit narrowed to £10.0 billion from £18.1 billion in Q3. 

Household expenditure advanced by 0.7 percent (from 0.8 percent in Q3); and gross fixed capital formation edged up 0.1 percent (0.6 percent in Q3), despite a 0.9 percent contraction in business investment (from 0.4 percent in Q3), driven by falls within the other buildings and structures and transport equipment assets. Meanwhile, government spending showed no growth (from -0.1 percent in Q3); and the level of inventories rose by £12 million, following an increase of £1,448 million in the previous period.

From the production side, the service industries increased by 0.8 percent following a 0.9 percent gain in Q3 and marking the 16th consecutive quarter of growth. Output rose for: Distribution, hotels and catering (2 percent from 1.1 percent in Q3); transport, storage and communication (0.8 percent from 2.6 percent); business services and finance (0.5 percent from 0.7 percent); and government and other services (0.3 percent, the same as in Q3). Industrial output increased by 0.4 percent (-0.4 percent in Q3), as output expanded for: manufacturing (1.2 percent from -0.7 percent in Q3); electricity, gas, steam and air conditioning supply (4 percent from -4.3 percent); and water supply and sewerage (0.9 percent from -0.1 percent). By contrast, output from mining and quarrying (including oil and gas extraction) contracted by 6.9 percent (4.5 percent in Q3). Construction output advanced by 1 percent, following a 0.3 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 1.9 percent, worse than a second estimate of a 2 percent expansion.

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





Tuesday March 21 2017
UK Inflation Rate At 3-1/2-Year High Of 2.3%
ONS | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in the United Kingdom increased 2.3 percent year-on-year in February of 2017, above 1.8 percent in January and beating expectations of 2.1 percent. It is the highest inflation rate since September of 2013, boosted by rising fuel prices while food cost increased for the first time in 34 months.

Year-on-year, main upward pressure came from prices of transport (6.9 percent compared to 5.7 percent in January); housing and utilities (0.7 percent compared to 0.6 percent); recreation and culture (1.6 percent compared to 0.9 percent); restaurants and hotels (3.2 percent compared to 3 percent); food and non-alcoholic beverages (0.2 percent compared to -0.5 percent) and miscellaneous goods and services (1.1 percent compared to 0.8 percent). In contrast, cost of clothing and footwear edged down 0.1 percent (after being flat in January). 

On a monthly basis, consumer prices jumped 0.7 percent, following a 0.5 percent drop in January and above market expectations of 0.5 percent. The largest upward effect came from transport (1.2 percent compared to -0.6 percent in January), namely motor fuels, second-hand cars, sea and coach fares; recreation and culture (0.5 percent compared to -0.7 percent), namely personal computers including laptops and tablets; food (0.8 percent compared to 0.2 percent). 

The core index which excludes prices of energy, food, alcohol and tobacco increased 2 percent on the year, higher than 1.6 percent in the previous two months and above expectations of 1.8 percent. 


Thursday March 16 2017
UK Leaves Key Rate Steady At 0.25%
BoE | Joana Taborda | joana.taborda@tradingeconomics.com

The Bank of England Monetary Policy Committee kept the Bank Rate at a record low of 0.25 percent and left the stock of purchased assets at £435 billion on March 16th, 2017, in line with forecasts. Policymakers expect a slowdown in aggregate demand during this year and a rise in inflation to above the 2 percent target in the next few months.

Excerpts from the Monetary Policy Summary:

As the MPC had observed at the time of the UK’s referendum on EU membership, the appropriate path for monetary policy depends on the evolution of demand, potential supply, the exchange rate, and therefore inflation. The Committee expects a slowdown in aggregate demand over the course of this year, as household demand growth declines in reaction to lower real income growth. Official estimates of retail sales have weakened notably, consistent with this expectation, although other indicators of consumer demand such as consumer confidence have been steadier. Measures of overall activity growth have been resilient, with official estimates indicating a fairly steady pace of expansion around historical average rates and business surveys suggesting little change in the near term. It is possible that slowing consumption may be offset to some degree by other components of demand, such as a more supportive net trade position following last year’s fall in sterling and the recent pickup in global momentum.

CPI inflation increased to 1.8% in January, and the MPC expects it to rise above the 2% target over the next few months, before peaking at around 2¾% in early 2018 and drifting gradually back down towards the target thereafter. The projected overshoot entirely reflects the expected effects of the drop in sterling. Pay growth has remained subdued, while measures of inflation expectations remain at levels broadly consistent with the achievement of the inflation target.

Monetary policy cannot prevent either the real adjustment that is necessary as the UK moves towards its new international trading arrangements or the weaker real income growth that is likely to accompany it over the next few years. 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 March 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. Eight members thought that the current stance of monetary policy remained appropriate to balance the demands of the Committee’s remit.  Kristin Forbes considered it appropriate to increase Bank Rate by 25 basis points.

As the Committee has previously noted, 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 February 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, without a sufficient offset by other components of demand. 




Wednesday March 15 2017
UK Jobless Rate Hits Lowest Since 2005
ONS | Yekaterina Guchshina | yekaterina@tradingeconomics.com

UK unemployment rate fell to 4.7 percent in the period between November and January 2017 from 4.8 percent in the previous period and below market expectations of 4.8 percent. It was the lowest jobless rate since July to September 2005. The employment rate remained at all-time high of 74.6 percent as the number of people in work rose by 92 thousand while wage growth slowed.

Estimates from the Labour Force Survey show that, between August to October 2016 and the 3 months to January 2017, the number of people in work increased, the number of unemployed people fell, and the number of people aged from 16 to 64 not working and not seeking or available to work (economically inactive) also fell.

There were 1.58 million unemployed people (people not in work but seeking and available to work), 31,000 fewer than for August to October 2016 and 106,000 fewer than for a year earlier. There were 867,000 unemployed men, 21,000 fewer than for August to October 2016 and 56,000 fewer than for a year earlier. There were 717,000 unemployed women, 10,000 fewer than for August to October 2016 and 50,000 fewer than for a year earlier. The unemployment rate was 4.7%, down from 5.1% 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 31.85 million people in work, 92,000 more than for August to October 2016 and 315,000 more than for a year earlier. There were 23.34 million people working full-time, 305,000 more than for a year earlier. There were 8.52 million people working part-time, 10,000 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%, the joint highest since comparable records began in 1971.

There were 8.87 million people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 34,000 fewer than for August to October 2016 and 59,000 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%, slightly lower than for August to October 2016 (21.7%) and lower than for a year earlier (21.8%).

Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.2 percent including bonuses, and by 2.3 percent excluding bonuses, compared with a year earlier.



Friday March 10 2017
UK Trade Deficit Narrows Slightly In January
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK’s deficit on trade in goods and services decreased slightly by £0.1 billion to £1.97 billion in January 2017 from a downwardly revised £2.03 billion in December. Exports advanced by £0.4 billion to an all-time high of £49.4 billion, boosted by higher sales of machinery and transport equipment, mainly electrical machinery and cars, and chemicals; and imports increased by £0.3 billion also to a record £51.4 billion, as purchases of oil and chemicals rose the most.

Exports of goods and services increased by £0.4 billion to an all-time high of £49.4 billion in January from £49.0 billion in December, boosted by higher sales of machinery and transport equipment, mainly electrical machinery and cars, and chemicals. Exports rose the most to France (8 percent), the Netherlands (7.1 percent), the US (7 percent), China (5.1 percent) and Germany (4.9 percent). By contrast, sales fell to Spain (-20.3 percent), Switzerland (-10.3 percent) and Canada (-8.8 percent).

Imports of goods and services rose by £0.3 billion also to a record £51.4 billion from £51.0 billion in the previous month, as purchases of oil and chemicals rose the most. Imports rose from Norway (52.9 percent), the Netherlands (10 percent), Spain (3.5 percent) and Germany (2.5 percent); but fell from Japan (-18.2 percent), France (-12.5 percent), the US (-7.4 percent), Switzerland (-5.4 percent) and China (-1.1 percent).

The trade in goods deficit narrowed by £0.1 billion to £10.8 billion between December 2016 and January 2017. In the same period, imports of oil increased from the non-EU countries, specifically Norway, which restricted the narrowing of the deficit. However, the erratics series had less impact on the trade in goods deficit in January 2017 than seen in previous months, with both exports and imports of these volatile commodities decreasing. When removing oil and the erratic commodities (ships, aircraft, precious stones, silver and non-monetary gold) the deficit narrowed by £0.8 billion, to £11.2 billion on the month.

On the price front, export prices increased by 2.1 percent and import prices increased by 2.5 percent. The value of sterling was 1.7 percent lower in January 2017 compared with the December 2016 average, following appreciation in November and December 2016. However, it remains 13.1 percent lower when compared with January 2016.

Between the 3 months to October 2016 and the 3 months to January 2017, the total trade deficit (goods and services) narrowed by £4.7 billion to £6.4 billion. The narrowing of the deficit reflected a greater rise in exports (6.3 percent) than the rise in imports (2.7 percent). Exports of services increased by 1.7 percent in the 3 months to January 2017; this led to an increase in the trade in services surplus for that period. Exports of unspecified goods (including non-monetary gold), oil, machinery and transport equipment (mainly electrical machinery, aircraft and cars) and chemicals were the largest contributors to the 3-monthly growth in exports of goods for the same period. The deficit of trade in goods, excluding oil and erratics, widened by £2.3 billion to £34.7 billion.


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.