Tuesday December 11 2018
UK Jobless Rate Remains Close to 43-Year Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The unemployment rate in the UK stood at 4.1 percent in the three months to October 2018, remaining close to its lowest level since the 1970s and matching market expectations. The number of unemployed rose by 20,000 from the May to July period while employment increased by 79,000 and the number of job vacancies were near an all-time high. Average weekly earnings including bonuses rose 3.3 percent on the year, their biggest rise since the three months to July 2008; excluding bonuses, wages also grew 3.3 percent, the most since the end of 2008.

There were an estimated 1.38 million unemployed people, 20,000 more than for May to July 2018 but 49,000 fewer than for a year earlier. The unemployment rate was estimated at 4.1 percent, virtually unchanged compared with May to July 2018 but lower than the estimate for a year earlier (4.3 percent).

There were an estimated 32.48 million people in work, 79,000 more than for May to July 2018 and 396,000 more than for a year earlier. The employment rate was estimated at 75.7 percent, higher than for a year earlier (75.1 percent) and the joint-highest estimate since comparable estimates began in 1971.

There were an estimated 8.66 million people aged from 16 to 64 years who were economically inactive, 95,000 fewer than for May to July 2018 and 195,000 fewer than for a year earlier. The economic inactivity rate was estimated at 21 percent, lower than for a year earlier (21.5 percent) and the joint-lowest estimate since comparable estimates began in 1971.

Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms increased by 3.3 percent, both excluding and including bonuses, compared with a year earlier. Latest estimates show that average weekly earnings for employees in Great Britain in real terms (that is, adjusted for price inflation) increased by 1 percent excluding bonuses, and by 1.1 percent including bonuses, compared with a year earlier.




Monday December 10 2018
UK Trade Deficit Widens in October
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK trade deficit widened by GBP 0.97 billion to GBP 3.30 billion in October 2018 from an upwardly revised GBP 2.33 billion in the previous month.

Imports of goods and services to the UK rose 2.8 percent to GBP 56.68 billion in October from GBP 55.17 billion in the previous month. The increase was driven by a 3.5 percent jump in purchases of goods, such as machinery & transport equipment (5.4 percent), miscellaneous manufactures (4.5 percent), chemicals (7.7 percent), fuels (1.1 percent), material manufactures (5.1 percent), and food & live animals (2.6 percent). Imports of services went up 0.5 percent.

Among major trading partners, imports of goods from non-EU countries went up 6 percent, as purchases increased the most from China (9.3 percent), the US (11.3 percent), Norway (32.5 percent), Japan (5.9 percent), Russia (7.4 percent) and India (7.1 percent); while those from Turkey dropped 3.2 percent. In addition, imports from the EU increased 1.4 percent, mainly from Germany (7.7 percent), the Netherlands (0.6 percent), France (0.1 percent), Belgium (0.2 percent), Italy (4.3 percent) and Spain (2.1 percent). There was a decline in imports from Ireland (-8.5 percent) and Poland (-2 percent).

Meanwhile, exports of goods and services from the UK advanced at a softer 1 percent to an all-time high of GBP 53.38 billion in October from GBP 52.83 billion in the previous month, due to sales of services (1.3 percent) and goods (0.8 percent). Within goods commodities, increases were recorded in exports of chemicals (11.6 percent), miscellaneous manufactures (2.5 percent) and food & live animals (1.5 percent); while falls were seen in sales of machinery & transport equipment (-5.3 percent) and material manufactures (-0.4 percent).

Among major trading partners, exports of goods to the EU went up 3 percent, as sales increased mainly to Germany (4.2 percent), the Netherlands (12.5 percent), France (8.9 percent) and Ireland (1.4 percent); while there was a decline in exports to Belgium (-5.9 percent) and Italy (-0.4 percent). By contrast, sales to non-EU countries fell 1.1 percent, namely to Hong Kong (-10.6 percent), the UAE (-9.1 percent), Switzerland (-4.3 percent), Canada (-30.2 percent), Turkey (-17.7 percent) and Australia (-11.2 percent). Exports were higher to the US (13.1 percent), China (5.7 percent), Japan (8.2 percent), South Korea (14.6 percent) and India (3.2 percent).




Wednesday November 14 2018
UK Inflation Rate Below Forecasts at 2.4%
ONS | Joana Taborda | joana.taborda@tradingeconomics.com

Annual inflation rate in the United Kingdom was flat at 2.4 percent in October of 2018, the same as in September but below market expectations of 2.5 percent. Prices slowed for transport and food but rose faster for housing and utilities and recreation and culture.

Year-on-year, prices rose at a slower pace for transport (5.4 percent vs 5.6 percent in September), namely transportation services (3.1 percent vs 4.2 percent); restaurants and hotes (2.4 percent vs 2.5 percent); and food and non-alcoholic beverages (0.9 percent vs 1.5 percent, the lowest since February of 2017). Also, prices declined more for clothing and footwear (-1.1 percent compared to -0.4 percent) and were unchanged for miscellaneous goods and services (vs -0.3 percent). On the other hand, inflation accelerated for recreation and culture (3.2 percent vs 3 percent); housing, water, electricity, gas and other fuels (2.9 percent vs 2.7 percent), namely gas (7.6 percent vs 5.5 percent); and furniture, household equipment and maintenance (0.7 percent vs 0.5 percent). 

The consumer prices index including owner occupiers’ housing costs (CPIH) rose by 2.2 percent in October, the same as in September. 

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, was flat at 1.9 percent, the same as in September and in line with market expectations.

On a monthly basis, consumer prices edged up 0.1 percent, the same as in September and below forecasts of 0.2 percent. Prices fell for transport (-0.4 percent) and food and non-alcoholic beverages (-0.2 percent) but rose for housing and utilities (0.6 percent) and education (2.1 percent).




Tuesday November 13 2018
UK Unemployment Rate Rises to 4.1%
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The unemployment rate in the UK came in at 4.1 percent in the third quarter of 2018, slightly higher than market expectations of 4 percent. The number of unemployed rose by 21,000 from the April to June period while employment rose by 23,000 and the number of job vacancies hit a fresh record high. Average weekly earnings including bonuses rose 3 percent in the third quarter, the most since Q3 2015; excluding bonuses, wages grew 3.2 percent, the most since Q4 2008.

There were 1.38 million unemployed people, 21,000 more than for April to June 2018 but 43,000 fewer than for a year earlier. The unemployment rate was 4.1 percent, slightly higher than for April to June 2018 but lower than for a year earlier (4.3 percent). 

There were 32.41 million people in work, 23,000 more compared with April to June 2018 and 350,000 more than for a year earlier. The employment rate was 75.5 percent, little changed compared with April to June 2018 but higher than for a year earlier (75 percent).

There were 8.74 million people aged from 16 to 64 years who were economically inactive, little changed compared with April to June 2018 but 147,000 fewer than for a year earlier. The economic inactivity rate was 21.2 percent, unchanged compared with April to June 2018 but lower than for a year earlier (21.6 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 3.2 percent excluding bonuses, and by 3 percent including bonuses, compared with a year earlier. Latest estimates show that average weekly earnings for employees in Great Britain in real terms (that is, adjusted for price inflation) increased by 0.9 percent excluding bonuses, and by 0.8 percent including bonuses, compared with a year earlier.


Friday November 09 2018
UK Q3 GDP Annual Growth Strongest in 1 Year
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The gross domestic product in the United Kingdom expanded 1.5 percent year-on-year in the third quarter of 2018, up from 1.2 percent in the previous period and matching market expectations. It was the strongest pace of expansion since the third quarter of 2017 mainly driven by household consumption and exports while business investment dropped the most since the first quarter of 2016.

On the expenditure side, household expenditure rose 1.8 percent in the third quarter (vs 1.6 percent in Q2); and government spending advanced 0.8 percent after being unchanged in the previous period. By contrast, fixed investment showed no growth (vs -0.6 percent in Q2) as business investment contracted the most since the first quarter of 2016.

Exports rose 0.7 percent, following a 0.8 percent gain in Q2; while imports declined 0.5 percent, after increasing by 0.6 percent the previous period. As a result, the trade deficit narrowed to £1.655 billion from £3.530 billion in Q3 2017. 

On the production side, the service industries expanded 1.7 percent (vs 1.5 percent in Q2), as output rose for: distribution, hotels and restaurants (2.8 percent vs 2.3 percent); transport storage and communications (4.1 percent vs 3.3 percent); business services and finance (1.3 percent vs 1.6 percent); and government and other services (0.3 percent vs 0.2 percent). Industrial production went up 0.7 percent (vs 0.8 percent in Q2), as output rose for: manufacturing (1 percent vs 1.3 percent); mining and quarrying (0.4 percent vs -1.1 percent); and water supply, sewerage, waste management and remediation activities (0.5 percent vs -0.4 percent). Electricity, gas, steam and air conditioning supply shrank 1 percent after a 0.7 percent contraction in the previous period. Construction expansion picked up to 2 percent from 0.4 percent in Q2.




Friday November 09 2018
UK Posts Smallest Trade Gap in 7 Months
ONS | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The UK trade deficit decreased by GBP 2.07 billion to GBP 0.03 billion in September 2018 from an upwardly revised GBP 2.10 billion in the prior month. It was the smallest trade gap since February when a GBP 0.21 billion surplus was recorded.

Exports of goods and services rose 1.2 percent to GBP 54.95 billion in September of 2018 from GBP 54.29 billion in the previous month. The increase was boosted by a 1.7 percent gain in exports of goods and a 0.6 percent rise in services. Among purchases of goods, higher shipments were recorded in machinery and transport equipment (6.3 percent), material manufactures (5.4 percent) and crude materials (2.5 percent). In contrast, external sales fell mostly for chemicals (-0.6 percent), fuels (-9.8 percent) and food & live animals (-0.5 percent). 

Among major trading partners, exports of goods to non-EU countries advanced 5.0 percent, primarily to the US (1.7 percent), Canada (33.4 percent), the UAE (13.5 percent), India (3.3 percent) and Turkey (4.0 percent). Contrastingly, sales declined to China (-13.6 percent), Hong Kong (-6.1 percent), Switzerland (-8.0 percent) and South Korea (-8.9 percent). Meantime, shipments to the EU countries fell 1.7 percent, as sales decreased mainly to France (-23.5 percent), Belgium (-4.9 percent) and Spain (-3.0 percent) while they rose to Germany (1.2 percent), the Netherlands (2.2 percent) and Ireland (0.2 percent)

Imports declined 2.5 percent to GBP 54.98 billion from GBP 56.39 billion in August, mainly dragged down by lower purchases of both machinery & transport equipment and material manufactures (-3.6 percent), chemicals (-7.7 percent), fuels (-8.3 percent), food & live animals (-2.2 percent) and crude materials (-3.8 percent). 

Among major trading partners, imports of goods decreased 7.3 percent from non-EU countries, namely China (-4.3 percent), the US (-17.9 percent), Norway (-25 percent), Russia (-15 percent) and Turkey (-0.2 percent). In contrast, increases in imports were seen from Japan (2.5 percent) and India (12.1 percent). At the same time, purchases from the EU went down 0.1 percent, led by lower purchases from Germany (-1.0 percent), the Netherlands (-2.8 percent) and Belgium (-0.7 percent).

In the three months to September, the trade shortfall narrowed GBP 3.18 billion to GBP 2.92 billion, as exports of goods and services grew at a faster 3.8 percent to GBP 163.52 billion and imports went up 1.7 percent to GBP 166.44 billion.


Friday November 09 2018
UK Economy Grows at Fastest Pace in Nearly 2 Years
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy grew by 0.6 percent on quarter in the three months to September 2018, following a 0.4 percent expansion in the previous period and matching market expectations, a preliminary estimate showed. It was the strongest growth rate since the last quarter of 2016 as household spending and exports rose firmly while business investment contracted at the fastest pace since early 2016 in part due to Brexit-related economic and political uncertainty.

Household consumption growth picked up to 0.5 percent in the third quarter from 0.4 percent in the previous three-month period. While the increase in Quarter 3 reflected growth across most categories of expenditure, there was a notably sharp drop in household spending on transport. In addition, government spending rebounded 0.6 percent after a 0.4 percent drop in the previous period; and net external demand contributed positively to the GDP growth as the trade deficit narrowed sharply to £1.655 billion from £5.659 billion in the previous period. Exports of goods and services jumped 2.7 percent (vs -2.2 percent in Q2) while imports were flat (vs -0.2 percent in Q2).

Meanwhile, the largest negative contribution to growth in Quarter 3 came from gross capital formation (GCF) – which includes gross fixed capital formation (GFCF), changes in inventories and acquisitions less disposal of valuables – subtracting 0.6 percentage points. However, this largely reflects the application of an alignment adjustment (used to balance the three approaches to measuring GDP) to the changes in inventories component. Still, GFCF rose 0.8 percent in the third quarter driven by a strong increase in government investment (8.6 percent), which was the strongest seen since Q1 2014 and reflects broad expenditure growth across central government, most notable in defence. The rises in government and private dwelling investment were partially offset by a 1.2 percent decrease in business investment in Quarter 3. This was the sharpest decline since Q1 2016 and marked the third consecutive quarterly fall – which has not been seen since the global financial crisis. 

"However, today’s figures should be interpreted with some caution as early estimates of business investment can be prone to revision. The recent subdued business investment environment is consistent with external surveys of investment intentions, which attribute much of the weakness to Brexit-related economic and political uncertainty. The uncertainty appears to be deepening recently, with the latest Bank of England’s (BoE) November Inflation Report noting that Brexit and associated uncertainty “may have weighed on investment by more than had been expected in August”. The BoE’s Agents’ summary survey for Quarter 3 further indicated that Brexit uncertainty was the single largest factor weighing on firms’ investment spending plans. These sentiments are echoed in the latest Confederation of British Industry’s (CBI) Industrial Trends Survey (ITS) for the three months to October, which saw planned capital expenditure on plant and machinery for the year ahead fall at its fastest pace since July 2009." the Office for National Statistics said.

From the production side, construction output growth continued to pick up following a weak start to the year, while quarterly output in the manufacturing sector rose for the first time in 2018. Growth in services output slowed to 0.4 percent, but remained the largest positive contributor to GDP growth in the third quarter.




Thursday November 01 2018
BoE Leaves Rates Unchanged
BoE | Joana Taborda | joana.taborda@tradingeconomics.com

The Bank of England voted unanimously to leave the Bank Rate steady at 0.75 percent on November 1st 2018, in line with market expectations. Policymakers said that if the economy continues to develop in line with forecasts, further tightening will be appropriate. The stock of UK government bond purchases, financed by the issuance of central bank reserves, was maintained at £435 billion.

The central bank lowered growth forecasts for both 2018 (1.3 percent from 1.4 percent) and 2019 (1.7 percent compared to 1.8 percent). Inflation is seen higher at 2.5 percent (2.3 percent in the August forecast) in the end of 2018 but lower at 2.1 percent (2.2 percent) in Q4 2019. 

Excerpts from the BoE Monetary Policy Summary:

The global economy continues to grow at above potential rates, supporting UK net trade. Growth has softened, however, and become more uneven across countries, and downside risks have risen. Global financial conditions have tightened, particularly in emerging market economies, and activity has slowed in the euro area.  Trade restrictions have increased and there is a risk of further escalation.

The MPC judges that aggregate supply and demand are now broadly in balance. The labour market remains tight, with the employment rate and vacancies around record highs, and the unemployment rate at its lowest since the mid-1970s. Regular pay growth has been stronger than expected, rising to over 3%.  Although modest by historical standards, the projected pace of UK GDP growth is slightly faster than the diminished rate of supply growth, which averages around 1½% per year. A margin of excess demand is therefore expected to build, feeding through into higher growth in domestic costs. The contribution of external cost pressures, which has accounted for above-target inflation since the beginning of 2017, is projected to ease over the forecast period. Taking these influences together, CPI inflation is projected to remain above the target for most of the forecast period, before reaching 2% by the end of the third year.

The economic outlook will depend significantly on the nature of EU withdrawal, in particular the form of new trading arrangements, the smoothness of the transition to them and the responses of households, businesses and financial markets. The implications for the appropriate path of monetary policy will depend on the balance of the effects on demand, supply and the exchange rate. The MPC judges that the monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.

At this meeting the MPC judged that the current stance of monetary policy remained appropriate. The Committee also judges that, were the economy to continue to develop broadly in line with the November Inflation Report projections, an ongoing tightening of monetary policy over the forecast period would be appropriate to return inflation sustainably to the 2% target at a conventional horizon. Any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent. 




Wednesday October 17 2018
UK Inflation Rate Falls to 3-Month Low of 2.4%
ONS | Joana Taborda | joana.taborda@tradingeconomics.com

Annual inflation rate in the United Kingdom eased to 2.4 percent in September of 2018 from 2.7 percent in August, below market expectations of 2.6 percent. It is the lowest reading in three months, mainly due to a slowdown in cost of food, transport and recreation and culture and a fall in clothing prices. Still, it remains above the BoE's target of 2 percent.

Year-on-year, prices rose at a slower pace for transport (5.6 percent vs 6.1 percent in August), namely transportation services (4.2 percent vs 6.4 percent); recreation and culture (3 percent vs 3.6 percent); food and non-alcoholic beverages (1.5 percent vs 2.5 percent); and furniture, household equipment and maintenance (0.5 percent vs 0.7 percent). Also, prices declined for clothing and footwear (-0.4 percent vs 0.3 percent) and miscellaneous goods and services (-0.3 percent vs -0.7 percent). On the other hand, inflation went up for housing, water, electricity, gas and other fuels (2.7 percent vs 2.3 percent), namely electricity (9.3 percent vs 7.4 percent) and gas (5.5 percent vs 4.3 percent) and was steady for restaurants and hotels (at 2.5 percent).

The consumer prices index including owner occupiers’ housing costs (CPIH) rose by 2.2 percent in September, below 2.4 percent in the previous month.

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, fell to 1.9 percent from a four-month high of 2.1 percent in August.

On a monthly basis, consumer prices edged up 0.1 percent, well below 0.7 percent in August and market expectations of 0.2 percent. Prices fell for transport (-1.8 percent) and food and non-alcoholic beverages (-0.2 percent) but rose sharply for clothing and footwear (3.1 percent) and education (1 percent). 


Tuesday October 16 2018
UK Jobless Rate Steady at 4%, Lowest Since 1975
ONS | Stefanie Moya | stefanie.moya@tradingeconomics.com

The unemployment rate in the UK was unchanged at 4 percent in the three months to August 2018, the lowest since 1975 and matching market expectations. The number of unemployed dropped by 47,000 from the March to May period while employment unexpectedly declined by 5,000, the first fall in near a year.

There were 1.36 million unemployed people (people not in work but seeking and available to work), 47,000 fewer than for March to May 2018 and 79,000 fewer than for a year earlier. The unemployment rate (the number of unemployed people as a proportion of all employed and unemployed people) was 4.0%; it has not been lower since December 1974 to February 1975.

There were 32.39 million people in work, little changed compared with March to May 2018 but 289,000 more than for a year earlier. The employment rate (the proportion of people aged from 16 to 64 years who were in work) was 75.5%, lower than for March to May 2018 (75.7%) but higher than for a year earlier (75.1%).

There were 8.75 million people aged from 16 to 64 years who were economically inactive (not working and not seeking or available to work), 103,000 more than for March to May 2018 but 65,000 fewer than for a year earlier. The economic inactivity rate (the proportion of people aged from 16 to 64 years who were economically inactive) was 21.2%, higher than for March to May 2018 (21.0%) but lower than for year earlier (21.4%).

Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 3.1 percent excluding bonuses, the most since the three months to January of 2009 and by 2.7 percent including bonuses, compared with a year earlier. Meanwhile, the average weekly earnings for employees in Great Britain in real terms (that is, adjusted for price inflation) increased by 0.7 percent excluding bonuses, and by 0.4 percent including bonuses, compared with a year earlier.

There were 832,000 job vacancies for July to September 2018, little changed from the period ended in June and 35,000 more compared to a year earlier. The industrial sector recorded the largest vacancy rate, namely accommodation and food service activities (4.1 vacancies per 100 filled employee jobs). On the other hand, the sector showing the smallest vacancy rate was public administration and defence (1.6 vacancies per 100 filled employee jobs).