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| UK GDP: growth hits near two-year high, but business investment shrinks - as it happened | UK GDP: growth hits near two-year high, but business investment shrinks - as it happened |
| (25 days later) | |
| And finally.... a UK thinktank has predicted that UK growth will slow to 0.4% in the final three months of 2018 | And finally.... a UK thinktank has predicted that UK growth will slow to 0.4% in the final three months of 2018 |
| The National Institute of Economic and Social Research’s latest GDP tracker predicts that the UK economy expanded by 0.4% in August-October, down from the 0.6% growth racked up in the third quarter. | The National Institute of Economic and Social Research’s latest GDP tracker predicts that the UK economy expanded by 0.4% in August-October, down from the 0.6% growth racked up in the third quarter. |
| NIESR also believes the economy will run at a similar rate until the end of 2018, and cautions not to get carried away by the stronger growth this summer. | NIESR also believes the economy will run at a similar rate until the end of 2018, and cautions not to get carried away by the stronger growth this summer. |
| It says: | It says: |
| In our view, UK economic growth peaked in the third quarter of this year and will settle at a rate that is close to its post-crisis average in the final quarter. | In our view, UK economic growth peaked in the third quarter of this year and will settle at a rate that is close to its post-crisis average in the final quarter. |
| According to new ONS statistics published this morning, the UK economy expanded by 0.6 per cent in the third quarter (three months to September) after growing by 0.4 per cent in the second quarter (three months to June). The outturn was slightly lower than the 0.7 per cent monthly GDP forecast that we published last month for the same period and the error is partly because of back data revisions. Building on the official data, our monthly GDP Tracker suggests that the economy will expand by 0.4 in the final quarter of this year. | According to new ONS statistics published this morning, the UK economy expanded by 0.6 per cent in the third quarter (three months to September) after growing by 0.4 per cent in the second quarter (three months to June). The outturn was slightly lower than the 0.7 per cent monthly GDP forecast that we published last month for the same period and the error is partly because of back data revisions. Building on the official data, our monthly GDP Tracker suggests that the economy will expand by 0.4 in the final quarter of this year. |
| The apparent strength in third quarter growth masks a loss in momentum in industrial production as well as services output in the latter part of the third quarter. There are a number of factors at play, including Brexit-related uncertainty. | The apparent strength in third quarter growth masks a loss in momentum in industrial production as well as services output in the latter part of the third quarter. There are a number of factors at play, including Brexit-related uncertainty. |
| That’s a good point to wrap up for the day, and the week. Thanks for reading and commenting. We’ll be back next week. GW | That’s a good point to wrap up for the day, and the week. Thanks for reading and commenting. We’ll be back next week. GW |
| Here’s a round-up of how the UK growth figures are being reported: | Here’s a round-up of how the UK growth figures are being reported: |
| Reuters: UK economy grows strongly in third quarter, with hints of tougher times ahead | Reuters: UK economy grows strongly in third quarter, with hints of tougher times ahead |
| Britain’s economy kept up healthy momentum during the third quarter, but this may prove a high watermark ahead of Brexit, official figures showed on Friday. | Britain’s economy kept up healthy momentum during the third quarter, but this may prove a high watermark ahead of Brexit, official figures showed on Friday. |
| Gross domestic product in the three months to September was 0.6 percent higher than in the previous quarter, matching the consensus forecast in a Reuters poll of economists, figures from the Office for National Statistics (ONS) showed. | Gross domestic product in the three months to September was 0.6 percent higher than in the previous quarter, matching the consensus forecast in a Reuters poll of economists, figures from the Office for National Statistics (ONS) showed. |
| Compared with a year earlier, the economy stood 1.5 percent larger. | Compared with a year earlier, the economy stood 1.5 percent larger. |
| But in September alone, it stagnated for a second month running, compared with forecasts for a rise of 0.1 percent. | But in September alone, it stagnated for a second month running, compared with forecasts for a rise of 0.1 percent. |
| Financial Times: UK economy grows at fastest rate since 2016 | Financial Times: UK economy grows at fastest rate since 2016 |
| The UK economy accelerated to its fastest quarterly growth rate in almost two years over the summer but economists warned that with Brexit uncertainties curbing spending, the performance would soon decline. | The UK economy accelerated to its fastest quarterly growth rate in almost two years over the summer but economists warned that with Brexit uncertainties curbing spending, the performance would soon decline. |
| Daily Telegraph: Strong summer sales fade as economy slows into autumn | Daily Telegraph: Strong summer sales fade as economy slows into autumn |
| Economic growth hit its highest pace since 2016 as GDP surged 0.6pc in the third quarter of the year on stronger manufacturing and construction growth. | Economic growth hit its highest pace since 2016 as GDP surged 0.6pc in the third quarter of the year on stronger manufacturing and construction growth. |
| Annual growth accelerated to 1.5pc, up from 1.2pc three months ago. | Annual growth accelerated to 1.5pc, up from 1.2pc three months ago. |
| But there are already signs the acceleration has faded, with most of the improvement coming in July and growth petering out by September. | But there are already signs the acceleration has faded, with most of the improvement coming in July and growth petering out by September. |
| The Times: Sunny summer helped economy to fastest growth for two years | The Times: Sunny summer helped economy to fastest growth for two years |
| The British economy grew by a perky 0.6 per cent in the third quarter, its fastest for two years, but the positive number was soured by a third successive quarter of falling business investment. | The British economy grew by a perky 0.6 per cent in the third quarter, its fastest for two years, but the positive number was soured by a third successive quarter of falling business investment. |
| The Office for National Statistics said that the growth in total output compared to the second quarter was the fastest performance since the first quarter of 2016, when the economy surged by 0.7 per cent. | The Office for National Statistics said that the growth in total output compared to the second quarter was the fastest performance since the first quarter of 2016, when the economy surged by 0.7 per cent. |
| Cheerfulness fuelled by England’s showing in the World Cup and the sunny weather pushed up retail sales and a recovery in construction in July produced a surge in the economy in the first month of the period. August and September were both flat, however, confirming concerns that the impetus has been fading. | Cheerfulness fuelled by England’s showing in the World Cup and the sunny weather pushed up retail sales and a recovery in construction in July produced a surge in the economy in the first month of the period. August and September were both flat, however, confirming concerns that the impetus has been fading. |
| Here’s our news story on today’s growth figures: | Here’s our news story on today’s growth figures: |
| UK economic growth hits two-year high but slowdown expected | |
| Andy Scott, associate director at independent financial risk management consultancy JCRA, also fears the UK is now slowing: | Andy Scott, associate director at independent financial risk management consultancy JCRA, also fears the UK is now slowing: |
| “The latest GDP figures show that the unexpectedly hot and sunny Summer has encouraged consumers to spend more on eating and drinking out, while Sterling weakness has helped to boost trade. By contrast, investment contracted sharply, suggesting that companies are preparing for a weaker economy by scaling back on spending, with implications for GDP growth as well as the labour market. | “The latest GDP figures show that the unexpectedly hot and sunny Summer has encouraged consumers to spend more on eating and drinking out, while Sterling weakness has helped to boost trade. By contrast, investment contracted sharply, suggesting that companies are preparing for a weaker economy by scaling back on spending, with implications for GDP growth as well as the labour market. |
| With a Brexit deal still hanging in the balance, we expect the economy to slow in the current quarter, as businesses and consumers brace themselves for the eventuality that no solution is found for the Irish border issue. The overall picture of the UK economy is however, one of resilience. With unemployment at multi-decade lows and wages accelerating, the robust levels of household spending should continue to act as a buffer against weakening sectors such as manufacturing, preventing the economy from stalling or worse, contracting. | With a Brexit deal still hanging in the balance, we expect the economy to slow in the current quarter, as businesses and consumers brace themselves for the eventuality that no solution is found for the Irish border issue. The overall picture of the UK economy is however, one of resilience. With unemployment at multi-decade lows and wages accelerating, the robust levels of household spending should continue to act as a buffer against weakening sectors such as manufacturing, preventing the economy from stalling or worse, contracting. |
| It’s official: the government can organise a photo op in a brewery..... | It’s official: the government can organise a photo op in a brewery..... |
| Here’s the ONS’s take on the growth figures: | Here’s the ONS’s take on the growth figures: |
| Today we’ve released our latest set of #GDP figures for Q3 2018. Commenting on the figures Head of GDP Rob Kent-Smith said: https://t.co/ROsP0NPAsB pic.twitter.com/ALt3kh0oub | Today we’ve released our latest set of #GDP figures for Q3 2018. Commenting on the figures Head of GDP Rob Kent-Smith said: https://t.co/ROsP0NPAsB pic.twitter.com/ALt3kh0oub |
| The UK can claim to have been one of the faster-growing advanced economies this summer. | The UK can claim to have been one of the faster-growing advanced economies this summer. |
| The eurozone, for example, only expanded by 0.2% in July-September, with Italy not managing any growth at all. Even France, which should have enjoyed its own World Cup boost, only grew by 0.4%. | The eurozone, for example, only expanded by 0.2% in July-September, with Italy not managing any growth at all. Even France, which should have enjoyed its own World Cup boost, only grew by 0.4%. |
| We get German GDP next Wednesday; some economists fear Europe’s largest economy may have shrunk due to trade war tensions, and a slowdown in its car sector. | We get German GDP next Wednesday; some economists fear Europe’s largest economy may have shrunk due to trade war tensions, and a slowdown in its car sector. |
| Japan is also predicted to have contracted, partly due to earthquake and typhoon disruption. | Japan is also predicted to have contracted, partly due to earthquake and typhoon disruption. |
| Britain hasn’t caught up with America’s strong growth, though.. | Britain hasn’t caught up with America’s strong growth, though.. |
| Here’s what we know so far: | Here’s what we know so far: |
| US: +0.9% quarterly growth in Q3 (or 3.5% on the ‘annualised’ basis used in America) | US: +0.9% quarterly growth in Q3 (or 3.5% on the ‘annualised’ basis used in America) |
| UK: +0.6% quarterly growth | UK: +0.6% quarterly growth |
| France: +0.4% quarterly growth | France: +0.4% quarterly growth |
| Eurozone: +0.2% | Eurozone: +0.2% |
| Italy: Stagnation | Italy: Stagnation |
| Canada: 0.2% growth in July, and 0.1% in August | Canada: 0.2% growth in July, and 0.1% in August |
| TUC General Secretary Frances O’Grady has called on the government to help stop the “worrying fall” in business investment. | TUC General Secretary Frances O’Grady has called on the government to help stop the “worrying fall” in business investment. |
| “The government should set up a National Investment Bank to upgrade Britain’s infrastructure. This would help raise productivity, giving a boost to growth and wages. | “The government should set up a National Investment Bank to upgrade Britain’s infrastructure. This would help raise productivity, giving a boost to growth and wages. |
| Business investment would also benefit from a Brexit deal that doesn’t gum up Britain’s trade links with the EU.... | Business investment would also benefit from a Brexit deal that doesn’t gum up Britain’s trade links with the EU.... |
| Hammond’s claim that Britain’s economy has ‘underlying strength’ really doesn’t match the steady slide in UK business investment this year. | Hammond’s claim that Britain’s economy has ‘underlying strength’ really doesn’t match the steady slide in UK business investment this year. |
| UK business investment not on a particularly encouraging path, notes Nomura's Jordan Rochester. "Brexit uncertainty is exerting a larger negative influence on business investment as we move closer to a deal/no-deal being confirmed." pic.twitter.com/41odH391XS | UK business investment not on a particularly encouraging path, notes Nomura's Jordan Rochester. "Brexit uncertainty is exerting a larger negative influence on business investment as we move closer to a deal/no-deal being confirmed." pic.twitter.com/41odH391XS |
| Worryingly, third consecutive quarter of drop in business investment (Brexit-related paralysis?) means UK less prepared for thriving in post-Brexit era. | Worryingly, third consecutive quarter of drop in business investment (Brexit-related paralysis?) means UK less prepared for thriving in post-Brexit era. |
| The Chancellor of the Exchequer, Philip Hammond, says today’s growth figures show the UK economy’s underlying strength. | The Chancellor of the Exchequer, Philip Hammond, says today’s growth figures show the UK economy’s underlying strength. |
| Speaking on a trip to Fuller’s Brewery in London (nice work if you can get it!), the chancellor hailed the GDP report - even though several economists are warning that the economy is slowing. | Speaking on a trip to Fuller’s Brewery in London (nice work if you can get it!), the chancellor hailed the GDP report - even though several economists are warning that the economy is slowing. |
| Hammond says: | Hammond says: |
| “Today’s positive growth of 0.6% is proof of the underlying strength in our economy. We are building an economy that works for everyone with 3.3 million more people in work, lower unemployment in every part of the country, and wages rising at their fastest pace in almost a decade. Now our focus is on locking in this progress and ensuring people’s wages can continue to rise. | “Today’s positive growth of 0.6% is proof of the underlying strength in our economy. We are building an economy that works for everyone with 3.3 million more people in work, lower unemployment in every part of the country, and wages rising at their fastest pace in almost a decade. Now our focus is on locking in this progress and ensuring people’s wages can continue to rise. |
| “That is why my Budget supports hardworking families by cutting taxes for 32 million people, provides more funding for public services – including a record-breaking funding increase for our vital NHS – and invests in our future with more money for transport and digital technology.” | “That is why my Budget supports hardworking families by cutting taxes for 32 million people, provides more funding for public services – including a record-breaking funding increase for our vital NHS – and invests in our future with more money for transport and digital technology.” |