Tuesday May 14 2019
UK Unemployment Rate Drops to Over 44-Year Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK unemployment rate fell to 3.8 percent in the first quarter of 2019, its lowest level since the October to December 1974 period and slightly below market expectations of 3.9 percent. Unemployment dropped by 65,000, the most in more than two years, and employment increased by 99,000 amid Brexit uncertainty. Meanwhile, total pay growth eased to 3.2 percent from the previous period's 3.5 percent, which was the highest rate since mid-2008.

For January to March 2019, an estimated 1.30 million people were unemployed, 119,000 fewer than for a year earlier and 914,000 fewer than for five years earlier. Estimated unemployment rates for both men and women aged 16 years and over have been generally falling since late 2013. For January to March 2019, the estimated unemployment rate: for men was 3.9 percent; it has not been lower since March to May 1975; for women was 3.7 percent, the lowest since comparable records began in 1971.

There were 32.70 million people aged 16 years and over in employment, 354,000 more than for a year earlier. This annual increase of 354,000 was due entirely to more people working full-time (up 372,000 on the year to reach 24.11 million). Part-time working showed a small fall of 18,000 on the year to reach 8.59 million. Estimated employment rates for men and women aged between 16 and 64 years have been generally increasing since early 2012. For January to March 2019, the estimated employment rate: for all people was 76.1 percent, the joint-highest since comparable records began in 1971; for men was 80.3 percent; slightly higher than for a year earlier (80 percent); for women was 71.8 percent, the joint-highest since comparable records began in 1971.

There were 8.61 million people aged from 16 to 64 years not in the labour force (economically inactive). This was: 69,000 fewer than for a year earlier; 390,000 fewer than for five years earlier. Since comparable records began in 1971, the economic inactivity rate for all people aged from 16 to 64 years has been generally falling (although it increased during recessions). This is due to a gradual fall in the economic inactivity rate for women. For people aged from 16 to 64 years, for January to March 2019, the estimated economic inactivity rate: for all people was 20.8 percent, close to a record low; for men was 16.3 percent; for women was 25.3 percent, the joint-lowest since comparable records began in 1971.

Average weekly earnings rose by an annual 3.2 percent in the three months to March, easing from 3.5 percent in the previous period and missing market expectations of 3.4 percent. Excluding bonuses, they rose by 3.3 percent on the year, in line with market consensus. In real terms, wages grew by 1.3 percent including bonuses and by 1.5 percent excluding bonuses.




Friday May 10 2019
UK GDP Annual Growth at 1-1/2-Year High
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

Britain's economy expanded 1.8 percent year-on-year in the first quarter of 2019, up from 1.4 percent in the previous period and in line with market consensus. It has not been stronger since the third quarter of 2017.

On the expenditure side, household expenditure rose 1.9 percent in the first quarter (vs 1.7 percent in Q4); and government spending advanced 2.2 percent (vs 1.0 percent in Q4). In addition, fixed investment surged 1.7 percent (vs -1.1 percent in Q4) despite a further decline in business investment (-1.4 percent vs -2.5 percent).

Imports jumped 10.2 percent, following a 2.6 percent increase in Q4; while exports rose at a much slower 1.5 percent, after a 0.2 percent gain in the previous period. As a result, the trade deficit widened sharply to £17.510 billion from £4.268 billion in Q1 2018.

On the production side, the service industries expanded 2 percent, the same as in Q4, as output rose for: distribution, hotels and restaurants (4.3 percent vs 3.5 percent); transport storage and communications (4.5 percent vs 3.9 percent); business services and finance (0.9 percent vs 1.4 percent); and government and other services (1.2 percent vs 1.1 percent). Industrial production rebounded 0.6 percent (vs -0.7 percent in Q4), as output grew for manufacturing (1.2 percent vs -1.3 percent) and mining & quarrying (6 percent vs 8.7 percent). By contrast, utilities output contracted for the fourth straight period (-5.9 percent vs -2.5 percent) and water supply, sewerage, waste management and remediation activities declined for the second consecutive quarter (-0.4 percent vs -0.7 percent). Construction expansion accelerated to 2.8 percent from 0.3 percent in Q4.




Friday May 10 2019
UK Trade Gap Narrows in March
ONS | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The UK trade deficit shrank to GBP 5.41 billion in March 2019 from an upwardly revised GBP 6.22 billion in the previous month.

Exports of goods and services from the UK rose 2.7 percent month-over-month to GBP 54.57 billion in March 2019, amid  higher sales of goods (4.6 percent) and services (0.3 percent). Within goods commodities, main gains were recorded in shipments of machinery & transport equipment (1.6 percent); miscellaneous manufactures (12.6 percent); chemicals (0.9 percent); food & live animals (4.6 percent) and crude materials (12.3 percent). However, declines were observed in sales of fuels (-6.9 percent); beverages & tobacco (-1.3 percent) and animal & vegetable oils & fats (-10.4 percent).

Among major trading partners, exports of goods to the EU advanced 3.5 percent, as shipments rose mainly to France (12.6 percent), Ireland (11 percent), Belgium (3.7 percent) and Italy (4.3 percent). In contrast, they slipped primarily to Germany (-4.5 percent), the Netherlands (-0.2 percent) and Spain (-5.3 percent). On the other hand, exports to non-EU countries increased 5.9 percent, namely China (20.4 percent), Hong Kong (57.5 percent), Japan (18.2 percent), India (18.5 percent), the UAE (21.9 percent) and Switzerland (5.3 percent), but they went down to the US (-2.8 percent) and Australia (-6.4 percent)

Imports of goods and services to the UK advanced at a softer 1.1 percent to GBP 59.97 billion, as purchases rose for goods (1.4 percent) and services (0.2 percent). Within goods commodities, imports rose mostly for chemicals (10 percent); miscellaneous manufactures (9.5 percent); machinery & transport equipment (2.2 percent) and material manufactures (2 percent). Meanwhile, purchases fell for unspecified goods (-40.8 percent); beverages & tobacco (-1.8 percent); animal & vegetable oils & fats (-1.8 percent) and crude materials (-0.5 percent).

Among major trading partners, imports of goods from the EU rose 6.8 percent, mainly Germany (6.1 percent), the Netherlands (12.2 percent), France (16.9 percent), Italy (1.3 percent) and Spain (5.2 percent). Conversely, main decreases were recorded from Belgium (-1.3 percent) and Ireland (-10 percent). At the same time, purchases from non-EU countries fell 4.8 percent, dragged down by lower imports from the US (-3.4 percent), Norway (-16.2 percent), Switzerland (-19 percent) and Australia (-24.9 percent). Meanwhile, main increases were seen from China (0.9 percent), Russia (1.6 percent) and India (16.7 percent).

Considering the first quarter of 2019, the country's trade deficit hit a record high of GBP 18.34 billion.




Friday May 10 2019
UK GDP Growth Accelerates to 0.5% in Q1
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK economy grew by 0.5 percent on quarter in the first three months of 2019, accelerating from a 0.2 percent expansion in the previous period and matching market expectations, a preliminary estimate showed. Private consumption, government spending and gross capital formation contributed positively, while net trade contributed negatively to GDP growth.

Household consumption growth accelerated to 0.7 percent in the first three months of 2019 from 0.3 percent in the previous quarter. However, external evidence points towards continued weakness in consumer demand, as "uncertainty about Brexit and the wider economy weighed on spending" according to the latest Bank of England Agents’ Summary of Business Conditions, while the GfK Consumer Confidence index remained unchanged at negative 13 in March 2019, below its long-run average. Government expenditure increased by 1.4 percent, following growth of 1.3 percent in Q4 2018, boosted by spending on a number of areas including health and other functions of central government, such as general public services and economic affairs.

Gross fixed capital formation (GFCF) increased by 2.1 percent in the first three months of 2019, rebounding from a 0.6 percent drop in Q4, mainly reflecting the 8.1 percent increase in general government investment due to increases across a number of central government departments. Business investment grew by 0.5 percent in the first quarter of 2019, after four consecutive quarters of decline, driven by higher investment in IT equipment and other machinery and equipment. There was also an increase of £5.2 billion in stocks being held by UK companies in the most recent quarter.

The UK trade deficit widened to £17.51 billion, the widest deficit in more than 50 years. Exports were flat, while import volumes increased by 6.8 percent, largely a reflection of the volume of imports of unspecified goods, which includes non-monetary gold (NMG). Trade in goods exports grew by 4.5 percent, reflecting increases in machinery and transport equipment and miscellaneous manufactures, while trade in services exports fell by an offsetting 5.0 percent due to falls in telecommunications, computer and information technology, intellectual property and other business services. The rise in imports reflects a 11 percent increase in trade in goods imports, partially offset by a 4.4 percent fall in trade in services imports.

On the production side, industrial output increased by 1.4 percent in the first quarter, rebounding from a 0.8 percent contraction in Q4, within which manufacturing output increased by 2.2 percent (vs -0.7 percent in Q4). Services output growth slowed to 0.3 percent from 0.5 percent, while construction output increased by 1 percent, compared to a 0.5 percent fall in Q4. Output of the agriculture, forestry and fishing sector fell by 1.8 percent (vs 0.6 percent in Q4), providing the only negative contribution to growth.




Thursday May 02 2019
BoE Still Plans to Raise Rates
Bank of England | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Bank of England's Monetary Policy Committee voted unanimously to hold the Bank Rate at 0.75 percent during its May policy meeting and reaffirmed its pledge to gradual and limited rate rises over the forecast period, despite the slowdown in global growth and ongoing Brexit uncertainties.

BoE Monetary Policy Summary:

The MPC has noted previously that UK data could be unusually volatile in the near term, due to shifting expectations about Brexit in financial markets and among households and businesses. GDP is expected to have grown by 0.5% in 2019 Q1, in part reflecting a larger-than-expected boost from companies in the United Kingdom and the European Union building stocks ahead of recent Brexit deadlines. That boost is expected to be temporary, however, and quarterly growth is expected to slow to around 0.2% in Q2. Smoothing through those developments, the underlying pace of GDP growth appears to be slightly stronger than previously anticipated, but marginally below potential. That subdued pace reflects the impact of the slowdown in global growth and ongoing Brexit uncertainties. The latter is having a particularly pronounced impact on business investment, which has been falling for a year. The MPC judges that there is currently a small margin of excess supply in the economy.      

In the MPC’s central projection, global growth stabilises around its potential rate and Brexit uncertainties subside gradually. Four-quarter UK GDP growth begins to pick up next year and rises to over 2% by the end of the forecast period. Business investment recovers and household spending continues to support demand growth, sustained by rising real incomes. GDP growth picks up above the subdued pace of potential supply growth, such that excess demand begins to build.  Excess demand rises above 1% of potential output by the end of the forecast period, notably higher than in the February Report, reflecting the support to demand provided by lower market interest rates and easier financial conditions more generally.

CPI inflation was 1.9% in March and is expected to be slightly further below the MPC’s 2% target during the first half of the forecast period, largely reflecting lower expected retail energy prices. The labour market remains tight, with the unemployment rate projected to decline to 3½% by the end of the forecast period. Annual pay growth has remained around 3½% and unit labour cost growth has strengthened to rates that are above historical averages. As excess demand emerges, domestic inflationary pressures are expected to firm, such that CPI inflation picks up to above the 2% target in two years’ time and is still rising at the end of the three-year forecast period.    

The Committee continues to judge that, were the economy to develop broadly in line with its Inflation Report projections, an ongoing tightening of monetary policy over the forecast period, at a gradual pace and to a limited extent, would be appropriate to return inflation sustainably to the 2% target at a conventional horizon.

The economic outlook will continue to depend significantly on the nature and timing of EU withdrawal, in particular: the new trading arrangements between the European Union and the United Kingdom; whether the transition to them is abrupt or smooth; and how households, businesses and financial markets respond.  The appropriate path of monetary policy will depend on the balance of these effects on demand, supply and the exchange rate. The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction. The Committee will always act to achieve the 2% inflation target.




Wednesday April 17 2019
UK Annual Inflation Rate Steady at 1.9% in March
ONS | Stefanie Moya | stefanie.moya@tradingeconomics.com

The annual inflation rate in the United Kingdom was at 1.9 percent in March 2019, unchanged from the previous month and below market expectations of 2 percent. Prices slowed for food and-non-alcoholic beverages while cost of transport rose further and inflation was steady for housing and utilities.

Year-on-year, prices eased for food and non-alcoholic beverages (0.8 percent compared to 1.1 percent in February); and recreation and culture (2.7 percent compared to 3.1 percent). Also, cost of clothing and footwear dropped at a softer pace (-1.6 percent compared to -2.0 percent). On the other hand, prices went up further for transport (3.3 percent compared to 3.1 percent); furniture, household equipment and maintenance (0.6 percent compared to 0.3 percent); restaurants and hotels (2.8 percent compared to 2.6 percent); miscellaneous goods and services (0.6 percent compared to 0.2 percent); health (2.5 percent compared to 2.4 percent); communication (3.7 percent compared to 3.6 percent); and alcoholic beverages and tobacco (5.2 percent compared to 5.1 percent). Additionally, inflation was steady for housing, water, electricity, gas and other fuels (at 1.2 percent, the same as in February); and education (at 3.1 percent). 

The consumer prices index including owner occupiers’ housing costs (CPIH) was at 1.8 percent in March, unchanged from the prior month.

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, rose by 1.8 percent, the same as in February and slightly below market consensus of 1.9 percent.

On a monthly basis, consumer prices advanced 0.2 percent, slowing from a 0.5 percent gain in the previous month and below market consensus of 0.3 percent. Prices eased for food and non-alcoholic beverages (0.1 percent compared to 0.4 percent in February); furniture and household equipment (0.1 percent compared to 2.0 percent); and miscellaneous goods and services (0.2 percent compared to 0.7 percent). In addition, cost fell for transport (-0.1 percent compared to 0.4 percent) and alcoholic beverages and tobacco (-0.3 percent compared to 0.9 percent).




Tuesday April 16 2019
UK Unemployment Rate Holds Steady at 44-Year Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK unemployment rate stood at 3.9 percent in the three months to February 2019, its lowest level since the November 1974-January 1975 period and in line with market expectations. Employment continued to increase at a solid pace despite Brexit uncertainty and total pay growth was at the joint highest rate since mid-2008.

For December 2018 to February 2019, an estimated 1.34 million people were unemployed, 76,000 fewer than for a year earlier and 914,000 fewer than for five years earlier. Estimated unemployment rates for both men and women aged 16 years and over have been generally falling since late 2013. For December 2018 to February 2019, the unemployment rate: for men was estimated at 4.1 percent; for women was estimated at 3.8 percent, the joint-lowest since comparable records began in 1971.

There were 32.72 million people aged 16 years and over in employment, 457,000 more than for a year earlier. This annual increase of 457,000 was due entirely to more people working full-time (up 473,000 on the year to reach 24.15 million). Part-time working showed a small fall of 15,000 on the year to reach 8.57 million. The UK employment rate was estimated at 76.1 percent, higher than for a year earlier (75.4 percent) and the joint-highest figure on record. Estimated employment rates for men and women aged between 16 and 64 years have been generally increasing since early 2012. For December 2018 to February 2019, the employment rate: for men was estimated at 80.5 percent; it has not been higher since December 1990 to February 1991; for women was estimated at 71.8 percent, the joint-highest since comparable records began in 1971.

There were 8.54 million people aged from 16 to 64 years not in the labour force (economically inactive). This was: 213,000 fewer than for a year earlier; 456,000 fewer than for five years earlier; the lowest since January to March 1993. The UK economic inactivity rate was estimated at 20.7 percent, lower than for a year earlier (21.2 percent) and the joint-lowest figure on record: for men was estimated at 16 percent; it has not been lower since May to July 2003; for women was estimated at 25.3 percent, the joint-lowest figure since comparable records began in 1971.

Average weekly earnings rose by an annual 3.5 percent in the three months to February, the same pace as in the previous period and in line with market expectations. That was the joint highest rate since mid-2008. Excluding bonuses, they rose by 3.4 percent on the year, also in line with market consensus. In real terms, wages grew by 1.6 percent including bonuses and by 1.5 percent excluding bonuses.


Wednesday April 10 2019
UK Trade Gap Narrows in February
ONS | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The UK trade deficit decreased to GBP 4.86 billion in February of 2019 from an upwardly revised GBP 5.35 billion in the prior month. Exports rose 0.1 percent month-over-month to GBP 54.79 billion while imports fell 0.7 percent to GBP 59.65 billion.

Exports of goods and services from the UK went up 0.1 percent month-over-month to GBP 54.79 billion in February 2019, as higher sales of goods (0.3 percent) were partly offset by a decline in those for services (-0.1 percent). Within goods commodities, main gains were registered in shipments of machinery & transport equipment (2.3 percent); chemicals (1.7 percent); food & live animals (1.4 percent) and beverages & tobacco (3.6 percent). Meantime, declines were seen in sales of miscellaneous manufactures (-2 percent); fuels (-6.3 percent) and crude materials (-2.1 percent).

Among major trading partners, exports of goods to the EU rose 1.8 percent, as shipments advanced mainly to Germany (4.4 percent), Belgium (2.5 percent) and Spain (7.4 percent). Meanwhile those to non-EU countries fell 1.2 percent, namely the US (-5.1 percent), Norway (-22.5 percent), India (-15.7 percent) and Australia (-14.6 percent). In contrast, they increased to China (4.3 percent) and Hong Kong (7.8 percent).

Imports of goods and services to the UK decreased 0.7 percent to GBP 59.65 billion, amid lower purchases of goods (-1.0 percent) while the ones for services were flat. Within goods commodities, declines were mostly recorded in purchases of miscellaneous manufactures (-3.6 percent); fuels (-11.1 percent); food & live animals (-0.9 percent) and animals 6 vegetables oils and fats (-15.8 percent).

Among major trading partners, imports of goods from non-EU countries declined 4.2 percent, of which the US (-10.8 percent), Australia (-10.6 percent), South Korea (-16.1 percent), the UAE (-26.8 percent), Turkey (-2.8 percent) and Hong Kong (-6.8 percent). Purchases from the EU grew 2 percent, mainly the Netherlands (2.2 percent), France (1.1 percent), Belgium (3.1 percent), Italy (2.9 percent), Ireland (9.9 percent). However, main decreases were seen from Germany (-0.6 percent) and Sweden (-5.2 percent).



Friday March 29 2019
UK Q4 GDP Annual Growth Revised Slightly Higher to 1.4%
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The gross domestic product in the United Kingdom expanded 1.4 percent year-on-year in the fourth quarter of 2018, compared to a preliminary estimate of 1.3 and the previous period's figure of 1.6 percent. Household consumption and government spending supported growth while business investment dropped and net trade contributed negatively to the expansion.

On the expenditure side, household expenditure rose 1.7 percent in the fourth quarter, little-changed from 1.8 percent in the previous period; and government spending surged 1 percent, reversing a 0.3 percent decline. By contrast, fixed investment dropped 1.1 percent (vs 0.2 percent in Q3) as business investment continued to contract (-2.5 percent vs -1.3 percent).

Exports edged up 0.2 percent (vs -1.3 percent in Q3) and imports rose at a faster 2.6 percent (vs -0.1 percent in Q3). As a result, the trade deficit widened to £6.9 billion from £3.2 billion in Q4 2017.

On the production side, the service industries expanded 2 percent (vs 1.9 percent in Q3), as output rose for: distribution, hotels and restaurants (3.5 percent vs 3.4 percent); transport storage and communications (3.9 percent vs 4.5 percent); business services and finance (1.4 percent, the same as in Q3); and government and other services (1.1 percent vs 0.3 percent). Construction grew 0.3 percent, after a 1.2 percent gain in Q3. By contrast, industrial production contracted 0.7 percent (vs 0.8 percent in Q3), as output fell for manufacturing (-1.3 percent vs 0.9 percent), electricity, gas, steam and air conditioning supply (-2.5 percent vs -1.9 percent) and water supply, sewerage, waste management and remediation activities (-0.7 percent vs 0.2 percent). Mining and quarrying jumped 8.7 percent, following a 4.6 percent advance in Q3.

Considering 2018 full year, the economy grew 1.4 percent, slower than 1.8 percent in 2017.


Friday March 29 2019
UK Q4 GDP Growth Confirmed at 0.2%
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

Britain's quarterly economic growth was confirmed at 0.2 percent in the three months to December 2018, below the previous three-month period's revised figure of 0.7 percent. Household consumption and government spending supported the expansion, while gross capital formation and net trade contributed negatively to GDP growth.

Household consumption growth eased to a year-low of 0.3 percent in the fourth quarter from 0.4 percent in the previous period. Spending on housing and household goods and services were the main drivers in the latest quarter. In addition, public spending rebounded firmly (1.3 percent vs -0.1 percent in Q3), with a significant contribution from increased defence spending.

By contrast, gross fixed capital formation dropped 0.6 percent (vs 0.9 percent in Q3), as business investment contracted for the fourth consecutive quarter, the first such instance since 2009, driven mainly by declines in transport equipment as well as IT equipment and other machinery. Also, there was a £4.2 billion increase in inventories, including alignment adjustments and balancing adjustments. However, excluding these adjustments the estimates show a slight decrease of £1.2 billion in stocks being held by UK companies.

Net external demand contributed negatively to the GDP growth as the trade deficit widened to £6.9 billion from £6.1 billion in the previous period. Exports of goods and services rose 1.6 percent (vs 0.9 percent in Q3) and imports rose at a faster 2.1 percent (vs 0.7 percent in Q3).

From the production side, services output increased 0.5 percent, easing from 0.6 percent in the previous period, amid Brexit-related concerns. However, industrial production declined 0.8 percent (vs 0.6 percent in Q3), with a fall in output recorded across all four main areas of production, and construction output shrank 0.5 percent (vs 1.8 percent in Q3).

Year-on-year, the economy expanded 1.4 percent in the fourth quarter, compared to a preliminary estimate of 1.3 and the previous period's figure of 1.6 percent. Considering 2018 full year, the GDP grew 1.4 percent, slower than 1.8 percent in 2017.