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).




Wednesday October 10 2018
UK Trade Deficit Widens in August
ONS | Stefanie Moya | stefanie.moya@tradingeconomics.com

The UK trade deficit widened by GBP 0.7 billion to GBP 1.27 billion in August 2018 from an upwardly revised GBP 0.57 billion in the previous month and compared to market expectations of GBP 1.15 billion gap. It was the largest trade gap since May, as imports rose further than exports.

Imports advanced 2.4 percent to GBP 56.35 billion in August from GBP 55.02 billion in the previous month. The increase was driven by a 3.1 percent gain in imports of goods and a 0.6 percent rise in services. Among purchases of goods, higher imports were recorded in chemicals (7.6 percent), fuels (7.9 percent), and both crude materials and beverages and tobacco (4.7 percent). On the other hand, imports declined for animal and vegetable oils and fats (-3.1 percent), food and live animals (-0.6 percent), miscellaneous manufactures (-0.6 percent) and unspecific goods (-15.4 percent). 

Among major trading partners, imports of goods from non-EU countries advanced 7.2 percent, while from the EU countries fell 0.5 percent.

Exports of goods and services from the UK rose 1.1 percent to GBP 55.07 billion in August, mostly due to higher sales of goods (1.4 percent), namely miscellaneous manufactures (5.9 percent), fuels (4.4 percent), food and live animals (3.2 percent), machinery and transport equipment (2.4 percent) and beverages and tobacco (2.3 percent). Meanwhile, sales dropped for animal and vegetable oils (-9.3 percent), crude materials (-4.4 percent), chemicals (-3.4 percent), unspecified goods (-8.5 percent) and material manufactures (-1.3 percent).

Among trading partners, exports of goods to non-EU countries increased 1.7 percent and to the EU rose 1.1 percent.

In the three months to July, the trade deficit narrowed GBP 4.7 billion to GBP 2.8 billion, as exports of goods and services both rose faster than imports.




Friday September 28 2018
UK Q2 GDP Annual Growth Revised Lower
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The gross domestic product in the United Kingdom expanded 1.2 percent year-on-year in the second quarter of 2018, revised from a preliminary estimate of 1.3 percent and little-changed from a near six-year low of 1.1 percent in the previous period.

On the expenditure side, household expenditure rose 1.6 percent in the second quarter (vs first estimate of 1.1 percent and 1.5 percent in Q1); while gross fixed capital formation dropped 0.6 percent (vs first estimate of 0.7 percent and 1.7 percent in Q1) as business investment contracted 0.2 percent (vs first estimate of 0.8 percent and 2.3 percent in Q1). Government spending was unchanged (vs first estimate of 1.1 percent), compared with 0.7 percent advance in the previous period.

Exports rose 0.8 percent (vs first estimate of -1.8 percent), following a 4.3 percent jump in Q1; while imports rose at a slower 0.6 percent (vs first estimate of -0.6 percent), after increasing by 1.4 percent the previous period. As a result, the trade deficit narrowed to £5.659 billion from £5.981 billion in Q2 2017. 

On the production side, the service industries expanded 1.5 percent (vs 1.3 percent in Q1), driven by wholesale & retail trade, transport storage & communication, and accommodation & food services. Industrial production went up 0.8 percent (vs first estimate of 1.4 percent and 2 percent in Q1), as manufacturing output rose while a contraction was recorded for mining & quarrying, electricity, gas, steam & air conditioning supply, and water supply, sewerage, waste management & remediation activities. Construction output rebounded 0.4 percent in the second quarter (vs first estimate of 0.8 percent and -0.3 percent in Q1).




Friday September 28 2018
UK Q2 GDP Growth Confirmed at 0.4%
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy grew by 0.4 percent on quarter in the three months to June 2018, unrevised from the first estimate and above the previous period's figure of 0.1 percent. Household consumption rose faster than initially thought while business investment unexpectedly contracted amid uncertainty around Brexit.

From the expenditure side, household consumption rose at 0.4 percent in the second quarter (vs first estimate of 0.3 percent and 0.5 percent in Q1). The slowdown in overall household consumption growth was due in part to a fall in energy use following the adverse weather earlier in the year. Meanwhile, gross fixed capital formation shrank 0.5 percent (vs first estimate of 0.8 percent and -1 percent in Q1), due to a 0.7 percent decline in business investment amid uncertainty around Brexit (vs first estimate of 0.5 percent and -0.5 percent in Q1). Also, government spending dropped 0.4 percent (vs first estimate of 0.4 percent and 0.2 percent in Q1).

Imports of goods and services dropped 0.2 percent (vs first estimate of -0.8 percent and -0.3 percent in Q1) and exports slumped 2.2 percent (vs first estimate of -3.6 percent and -0.8 percent in Q1). As a result, the trade deficit widened sharply to £5.659 billion from £2.553 billion in the previous period.

From the production side, services output grew 0.6 percent in the second quarter (vs first estimate of 0.5 percent and 0.3 percent in Q1). This marked the strongest quarterly growth in services since the last quarter of 2016, mainly driven by wholesale & retail trade, transport storage & communication, and accommodation & food services. Also, construction activity rebounded firmly (0.8 percent vs first estimate of 0.9 percent and -1.6 percent in Q1). By contrast, industrial production shrank 0.8 percent in the second quarter (vs 0.1 percent in Q1) due to declines in manufacturing and electricity, gas, steam & air conditioning supply; while output rose for mining & quarrying and water supply, sewerage, waste management & remediation activities.




Wednesday September 19 2018
UK Inflation Rises Unexpectedly to 6-Month High
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer price inflation in the UK rose to an annual rate of 2.7 percent in August 2018 from 2.5 percent in the previous month and comfortably above market expectations of 2.4 percent. It was the highest inflation rate since February mainly boosted by rising prices of transport, recreation & culture, and food & non-alcoholic beverages.

Main upward pressure came from: transport (6.1 percent vs 5.7 percent); recreation and culture (3.6 percent vs 3.1 percent); and food and non-alcoholic beverages (2.5 percent vs 2.3 percent); clothing and footwear (0.3 percent vs -0.4 percent). Also, inflation was unchanged for both housing, water, electricity, gas and other fuels (at 2.3 percent); and restaurants and hotels (at 2.5 percent).

Meanwhile, prices of furniture, household equipment and maintenance rose at a softer pace (0.7 percent vs 1.3 percent); while a deflation was recorded in miscellaneous goods and services (-0.7 percent vs -1 percent).

The consumer prices index including owner occupiers’ housing costs (CPIH) rose by 2.4 percent in August, up from 2.3 percent in the previous month.

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

On a monthly basis, consumer prices climbed 0.7 percent in August after being unchanged in the previous month, also beating market expectations of a 0.5 percent gain. There were increases in prices of clothing and footwear (3.1 percent), transport (1.3 percent), furniture, household equipment and maintenance (1.2 percent), recreation and culture (0.6 percent), miscellaneous goods and services (0.6 percent), food and non-alcoholic beverages (0.2 percent), housing and utilities (0.1 percent), and restaurants and hotels (0.1 percent).



Thursday September 13 2018
BoE Keeps Rates Steady
BoE | Joana Taborda | joana.taborda@tradingeconomics.com

The Bank of England voted unanimously to leave the Bank Rate unchanged at 0.75 percent on September 13th 2018, following a 25bps hike in the previous meeting. The decision came in line with market expectations. The Committee voted unanimously to maintain the stock of sterling non-financial investment-grade corporate bond purchases, financed by the issuance of central bank reserves, at £10 billion and the stock of UK government bond purchases, financed by the issuance of central bank reserves, at £435 billion.

Excerpts from the BoE Monetary Policy Summary:

In the MPC’s most recent economic projections, set out in the August Inflation Report, GDP was expected to grow by around 1¾% per year on average over the forecast period, conditioned on the gently rising path of Bank Rate implied by market yields at that time. Although modest by historical standards, the projected pace of GDP growth was slightly faster than the diminished rate of supply growth, which averaged around 1½% per year. With a very limited degree of slack remaining, a small margin of excess demand was therefore projected to emerge by late 2019 and build thereafter, feeding through into higher growth in domestic costs than has been seen over recent years. The contribution of external cost pressures, which has accounted for above-target inflation since the beginning of 2017, was projected to ease over the forecast period. Taking these influences together, and conditioned on the gently rising path of Bank Rate, CPI inflation remained slightly above 2% through most of the forecast period, reaching the target in the third year.

Recent news in UK macroeconomic data has been limited and the MPC’s August projections appear to be broadly on track. UK GDP grew by 0.4% in 2018 Q2 and by 0.6% in the three months to July. The UK labour market has continued to tighten, with the unemployment rate falling to 4.0% and the number of vacancies rising further.  Regular pay growth has risen further to around 3% on a year earlier. CPI inflation was 2.5% in July.

The global economy still appears to be growing at above-trend rates, although recent developments are likely to have increased downside risks around global growth to some degree. In emerging market economies, indicators of growth have continued to soften and financial conditions have tightened further, in some cases markedly. Recent announcements of further protectionist measures by the United States and China, if implemented, could have a somewhat more negative impact on global growth than was anticipated at the time of the August Report.

The MPC continues to recognise that the economic outlook could be influenced significantly by the response of households, businesses and financial markets to developments related to the process of EU withdrawal. Since the Committee’s previous meeting, there have been indications, most prominently in financial markets, of greater uncertainty about future developments in the withdrawal process.

The Committee judges that, were the economy to continue to develop broadly in line with the August 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. As before, these projections were conditioned on the expectation of a smooth adjustment to the average of a range of possible outcomes for the United Kingdom’s eventual trading relationship with the European Union. At this meeting, the Committee judged that the current stance of monetary policy remained appropriate. Any future increases in Bank Rate are likely to be at a gradual pace and to a limited extent.




Tuesday September 11 2018
UK Unemployment Rate Unchanged at 43-Year Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The unemployment rate in the UK held steady at 4 percent in the three months to July 2018, its joint-lowest since 1975 and in line with market consensus. The number of unemployed declined by 55,000 from the February to April period while employment rose by 3,000 and the number of job vacancies hit a fresh record high. Meanwhile, annual wage growth picked up from a nine-month low as businesses found it harder to recruit staff.

There were 1.36 million unemployed people, 55,000 fewer than for February to April 2018 and 95,000 fewer than for a year earlier. The unemployment rate was 4.0 percent; it has not been lower since December 1974 to February 1975.

There were 32.40 million people in work, little changed compared with February to April 2018 but 261,000 more than for a year earlier. The employment rate was 75.5 percent, slightly lower than for February to April 2018 (75.6 percent) but higher than for a year earlier (75.3 percent). 

There were 8.76 million people aged from 16 to 64 years who were economically inactive, 108,000 more than for February to April 2018 and 16,000 more than for a year earlier. The economic inactivity rate was 21.2 percent, higher than for February to April 2018 (21.0 percent) but unchanged compared with a year earlier.

Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.9 percent excluding bonuses, and by 2.6 percent including bonuses, compared with a year earlier. Meanwhile, average weekly earnings for employees in Great Britain in real terms (that is, adjusted for price inflation) increased by 0.5 percent excluding bonuses, and by 0.2 percent including bonuses, compared with a year earlier.

Job vacancies rose by 14,000 to an all-time high of 833,000 in the three months to August 2018 from 819,000 in the March to May period, driven by increases in vacancies in the following sectors: human health and social work activities (4,000); administration and support service activities (3,000); accommodation and food service activities (6,000); wholesale and retail trade (3,000); education (2,000); and construction (5,000). Over the same period, vacancies declined in the following sectors: professional, scientific and technical activities (-2,000); finance and insurance activities (-1,000); arts, entertainment and recreation (-4,000); information and communication (-2,000); and transport and storage (-1,000). Year-on-year, job vacancies rose by 44,000. They have been on an upward trend since the period April to June 2009, when vacancies were at their lowest level of 432,000.


Monday September 10 2018
UK July Trade Deficit Smallest in 5 Months
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK trade deficit narrowed by GBP 0.83 billion to GBP 0.11 billion in July 2018 from a downwardly revised GBP 0.94 billion in the previous month, and below market expectations of a GBP 2.1 billion gap. It was the smallest trade deficit since a surplus was recorded in February, as both exports and imports hit all-time highs.

Exports of goods and services from the UK increased 2 percent to an all-time high of GBP 54.38 billion in July from GBP 53.33 billion in the previous month, due to higher sales of goods (2.8 percent), in particular fuels (20.5 percent), material manufactures (2.6 percent), and food & live animals (1.4 percent). Meanwhile, there was a decline in exports of machinery & transport equipment (-1.5 percent), miscellaneous manufactures (-3.5 percent) and chemicals (-3.2 percent). Exports of services advanced 0.9 percent.

Among major trading partners, exports of goods to the EU went up 2.1 percent, as sales increased mainly to Germany (2.9 percent), the Netherlands (9.9 percent), Ireland (8 percent), Belgium (6 percent), Spain (4.1 percent) and Italy (4.5 percent); while there was a decline in exports to France (-3.4 percent). Also, sales to non-EU countries jumped 3.5 percent, namely to the US (4.8 percent), China (1.7 percent), Switzerland (22.2 percent), South Korea (85.5 percent), Hong Kong (34.2 percent), Turkey (5 percent) and India (17.3 percent). Exports were lower for the UAE (-11.5 percent) and Canada (-25.5 percent).

Imports rose at a softer 0.4 percent to a record GBP 54.49 billion in July from GBP 54.28 billion in the previous month. The increase was driven by a 0.6 percent rise in imports of services and a 0.3 percent gain in purchases of goods, mainly fuels (8 percent), miscellaneous manufactures (2.7 percent), and food & live animals (2.3 percent). On the other hand, imports fell for machinery & transport equipment (-2.6 percent), chemicals (-2.2 percent), and material manufactures (-1.8 percent).

Among trading partners, imports of goods from non-EU countries went up 2.6 percent, as purchases increased the most from China (10.8 percent), Norway (14.9 percent), Russia (20.3 percent), Japan (4.9 percent), Turkey (3.3 percent) and India (19.5 percent); while those from the US dropped 5 percent. By contrast, imports from the EU decreased 1.5 percent, mainly from Germany (-4.2 percent), the Netherlands (-2.8 percent), Italy (-0.1 percent) and Spain (-4.5 percent). There was an increase in imports from France (9.7 percent), Belgium (0.7 percent) and Ireland (6.7 percent).

In the three months to July, the trade deficit narrowed GBP 1.4 billion to GBP 3.4 billion, as exports of goods and services both increased more than imports.


Wednesday August 15 2018
UK Inflation Rate Rises to 2.5% in July
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer price inflation in the UK rose to an annual rate of 2.5 percent in July 2018 from a year low of 2.4 percent in the previous month and in line with market expectations. Inflation picked up for the first time since last November.

Main upward pressure came from: transport (5.7 percent vs 5.5 percent); recreation and culture (3.1 percent vs 2.4 percent); housing, water, electricity, gas and other fuels (2.3 percent vs 2.1 percent); and food and non-alcoholic beverages (2.3 percent vs 2 percent).

Meanwhile, prices rose at a softer pace for restaurants and hotels (2.5 percent vs 2.6 percent), and furniture, household equipment and maintenance (1.3 percent vs 2 percent); while a deflation was recorded in both miscellaneous goods and services (-1 percent vs -0.2 percent) and clothing and footwear sub-indexes (-0.4 percent vs 0.3 percent).

The consumer prices index including owner occupiers’ housing costs (CPIH) rose by 2.3 percent in July, the same as in June.

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, stood at 1.9 percent in July, the lowest since March 2017.

On a monthly basis, consumer prices were unchanged for the second straight month, compared with market expectations of a 0.1 percent drop. An increase in prices of transport (1.3 percent), recreation and culture (0.5 percent), housing and utilities (0.4 percent), restaurants and hotels (0.2 percent) and food and non-alcoholic beverages (0.2 percent) was offset by declines in cost of clothing and footwear (-3.7 percent), furniture, household equipment and maintenance (-1.8 percent) and miscellaneous goods and services (-0.8 percent).