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).





Tuesday August 14 2018
UK Jobless Rate Falls to Lowest since 1975
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The unemployment rate in the UK fell to 4 percent in the three months to June 2018, the lowest level since the December 1974-February 1975 period and below market consensus of 4.2 percent. The number of unemployed declined by 65,000 from the January to March period while employment rose by 42,000. Still, annual wage growth eased to a nine-month low.

There were 1.36 million unemployed people, 65,000 fewer than for January to March 2018 and 124,000 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 32.39 million people in work, 42,000 more than for January to March 2018 and 313,000 more than for a year earlier. The employment rate was 75.6 percent, unchanged compared with January to March 2018 but higher than for a year earlier (75.1 percent). There were 780,000 people in employment on “zero-hours contracts” in their main job, 104,000 fewer than for a year earlier.

There were 8.73 million people aged from 16 to 64 years who were economically inactive, 77,000 more than for January to March 2018 but 31,000 fewer than for a year earlier. The economic inactivity rate was 21.2 percent, higher than for January to March 2018 (21.0 percent) but slightly lower than for a year earlier (21.3 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 2.7 percent excluding bonuses, and by 2.4 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 0.4 percent excluding bonuses, and by 0.1 percent including bonuses, compared with a year earlier.




Friday August 10 2018
UK Trade Deficit Narrows in June
ONS | Stefanie Moya | stefanie.moya@tradingeconomics.com

The total UK trade deficit narrowed by GBP 1.28 billion to GBP 1.86 billion in June of 2018 from an upwardly revised GBP 3.14 billion in the previous month. Exports increased 2.7 percent to GBP 52.41 billion and imports rose 0.2 percent to GBP 54.27 billion.

Exports of goods and services from the UK jumped 2.7 percent to GBP 52.41 billion in June from GBP 51.04 billion in the previous month, mainly due to higher sales of goods (4.3 percent), namely material manufacturers (7.9 percent), crude materials (5.4 percent), machinery & transport equipment (4.6 percent) and chemicals (3.8 percent). Also, exports of services rose 0.8 percent.

Among major trading partners, exports of goods to the EU went up 1.7 percent, sales increased mainly to Netherlands (10.4 percent), Belgium (7.5 percent) and France (0.9 percent); while there was a decrease in sales to Irish Republic (-3.7 percent), Germany (-1.3 percent) and Italy (-10.4 percent). Also, sales to non-EU countries edged up 6.8 percent, namely to the US (4.8 percent), Canada (2.7 percent) and Japan (27.2 percent). Exports were lower for China (-4.6 percent) and Norway (-8.6 percent).

Imports advanced 0.2 percent to GBP 54.27 billion in June from GBP 54.18 billion in the previous month. The increase was driven by a 0.3 percent in sevices and by 0.1 percent in purchases of goods, mostly machinery & transport equipment (5.8 percent), crude materials (4.9 percent), material manufactures (1.4 percent), miscellaneous manufactures (1.4 percent) and beverage & tobacco (1.1 percent). 

Among trading partners, imports of goods from the EU dropped 1.0 percent, mainly from Belgium (-14.1 percent), Italy (-2.9 percent), Ireland (-0.7 percent) and Spain (-0.4 percent). By contrast, higher purchases were recorded from the Netherlands (3.3 percent), Germany (2.7 percent) and France (2.4 percent). On the other hand, purchases from non-EU countries increased 1.6 percent, as imports rose the most from China (1.4 percent) and the US (0.9 percent); while those from India (-17.8 percent) and Norway (-0.1 percent) declined.

In the three months to June of 2018, the trade deficit widened GBP 4.7 billion to GBP 8.6 billion. This was due to a GBP 5.5 billion widening of the trade in goods deficit, resulting from a combination of falling goods exports (GBP 3.1 billion) and rising goods imports (GBP 2.4 billion). Meantime, services imports narrowed by GBP 0.7 and exports rose by GBP 0.1 billion, resulting in an increased of GDP 0.7 billion in the trade in services surplus .




Friday August 10 2018
UK GDP Grows 1.2% in Q2
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The gross domestic product in the United Kingdom expanded 1.3 percent year-on-year in the second quarter of 2018, little-changed from a near six-year low of 1.2 percent in the previous period and matching market expectations. Household consumption rose the least since the first quarter of 2012.

On the expenditure side, household expenditure rose 1.1 percent in the second quarter (vs 1.2 percent in Q1), the weakest pace of growth since the first quarter of 2012; and gross fixed capital formation went up 0.7 percent (vs 1.5 percent in Q1) as business investment growth eased to 0.8 percent (vs 2 percent in Q1). Also, government spending grew by 1.1 percent, slower than 1.2 percent in the previous period.

Exports fell 1.8 percent, following a 2.4 percent gain in Q1; while imports declined at a slower 0.6 percent, after increasing by 0.6 percent the previous period. As a result, the trade deficit widened to £7.244 billion from £5.563 billion in Q2 2017. 

On the production side, the service industries expanded 1.5 percent (vs 1.2 percent in Q1), as output rose for: distribution, hotels and restaurants (1.5 percent vs 0.9 percent); transport storage and communications (3.4 percent vs 2.9 percent); business services and finance (1.7 percent vs 1.6 percent); and government and other services (0.2 percent vs 0.1 percent). Industrial production went up 1.4 percent (vs 2.4 percent in Q1), as output rose for: manufacturing (1.3 percent vs 2.5 percent); mining and quarrying (0.3 percent vs -0.1 percent); electricity, gas, steam and air conditioning supply (0.8 percent vs 4.1 percent); and water supply, sewerage, waste management and remediation activities (3.9 percent vs 1.3 percent). Construction expansion picked up to 0.8 percent from 0.3 percent in Q1.




Friday August 10 2018
UK Economy Expands 0.4% in Q2
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy grew by 0.4 percent on quarter in the three months to June 2018, following a 0.2 percent expansion in the previous period and matching market expectations, a preliminary estimate showed. Household consumption rose further and fixed investment rebounded firmly, while net trade subtracted from growth.

Household consumption growth picked up to 0.3 percent in the second quarter from 0.2 percent in the previous three-month period; and gross fixed capital formation increased 0.8 percent, rebounding from a 1.3 percent contraction in Q1, driven by rises in business investment (0.5 percent vs -0.4 percent in Q1) and private dwelling investment (1.1 percent vs 1.5 percent). Also, government spending advanced 0.4 percent, the same pace as in the previous period.

Imports of goods and services dropped 0.8 percent (vs -0.2 percent in Q1) and exports slumped 3.6 percent (vs flat reading in Q1). As a result, the trade deficit widened sharply to £7.244 billion from £3.174 billion in the previous period.

From the production side, services output grew 0.5 percent in the second quarter (vs 0.3 percent in Q1). This marked the strongest quarterly growth in services since the last quarter of 2016, mainly driven by wholesale and retail trade (1.6 percent vs unchanged), transport storage and communication (1.3 percent vs 0.1 percent), other services (1.2 percent vs 0.6 percent) and real estate (0.3 percent vs 0.1 percent). Also, construction activity rebounded firmly (0.9 percent vs -0.8 percent). By contrast, industrial production shrank 0.8 percent in the second quarter (vs 0.4 percent in Q1) due to declines in manufacturing (-0.9 percent vs -0.1 percent) and electricity, gas, steam and air conditioning supply (-2.7 percent vs 1.4 percent); while output rose for mining and quarrying (0.7 percent vs 2.5 percent) and water supply, sewerage, waste management and remediation activities (1.9 percent vs 1.7 percent).




Thursday August 02 2018
BoE Hikes Bank Rate to 0.75%
Bank of England | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Bank of England voted unanimously to raise the Bank Rate by 25bps at 0.75 percent on August 2nd, saying recent data appeared to confirm that the dip in output in the first quarter was temporary and that the labour market has continued to tighten and wage growth has firmed.

Excerpts from the BoE Monetary Policy Summary:

Since the May Inflation Report, the near-term outlook has evolved broadly in line with the MPC’s expectations. Recent data appear to confirm that the dip in output in the first quarter was temporary, with momentum recovering in the second quarter. The labour market has continued to tighten and unit labour cost growth has firmed.

The MPC’s updated projections for inflation and activity are set out in the August Inflation Report and are broadly similar to its projections in May.

In the MPC’s central forecast, conditioned on the gently rising path of Bank Rate implied by current market yields, GDP is expected to grow by around 1¾% per year on average over the forecast period. Global demand grows above its estimated potential rate and financial conditions remain accommodative, although both are somewhat less supportive of UK activity over the forecast period. Net trade and business investment continue to support UK activity, while consumption grows in line with the subdued pace of real incomes.

Although modest by historical standards, the projected pace of GDP growth over the forecast is slightly faster than the diminished rate of supply growth, which averages around 1½% per year. The MPC continues to judge that the UK economy currently has a very limited degree of slack. Unemployment is low and is projected to fall a little further. In the MPC’s central projection, therefore, a small margin of excess demand emerges by late 2019 and builds thereafter, feeding through into higher growth in domestic costs than has been seen over recent years.

CPI inflation was 2.4% in June, pushed above the 2% target by external cost pressures resulting from the effects of sterling’s past depreciation and higher energy prices. The contribution of external pressures is projected to ease over the forecast period while the contribution of domestic cost pressures is expected to rise.  Taking these influences together, and conditioned on the gently rising path of Bank Rate implied by current market yields, CPI inflation remains slightly above 2% through most of the forecast period, reaching the target in the third year.

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.

The Committee also judges that, were the economy to continue to develop broadly in line with its 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 July 18 2018
UK June Inflation Rate Weaker than Expected
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer price inflation in the UK stood at an annual rate of 2.4 percent in June 2018, unchanged from the previous month and below market expectations of 2.6 percent. June's rate remained at the lowest level since March 2017.

Transport prices jumped 5.5 percent in June, after a 4.7 percent advance in the previous month; and cost of housing, water, electricity, gas and other fuels moved up 2.1 percent, following a 1.5 percent gain in May.

Meanwhile, prices rose at a softer pace for recreation and culture (2.4 percent vs 2.6 percent); food and non-alcoholic beverages (2 percent vs 2.3 percent); clothing and footwear (0.3 percent vs 1.5 percent); and furniture, household equipment and maintenance (2 percent vs 2.1 percent). Restaurants and hotels inflation was unchanged at 2.6 percent; while a deflation was recorded in the miscellaneous goods and services sub-index (-0.2 percent vs unchanged).

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

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, fell to 1.9 percent June from 2.1 percent in the previous month, and missing market expectations of 2.2 percent. It was the lowest rate since March 2017.

On a monthly basis, consumer prices were unchanged, compared with May's 0.4 percent gain and market expectations of a 0.2 percent advance. An increase in prices of transport (0.8 percent), housing and utilities (0.6 percent) and restaurants and hotels (0.3 percent) was offset by declines in cost of recreation and culture (-0.4 percent), food and non-alcoholic beverages (-0.5 percent), miscellaneous goods and services (-0.1 percent) and clothing and footwear (-2.1 percent).


Tuesday July 17 2018
UK Jobless Rate Unchanged at 42-Year Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The jobless rate in the UK stood at 4.2 percent in the three months to May, its joint-lowest since 1975. The number of unemployed declined by 12,000 from the December to February period while 137,000 jobs were created, bringing the employment rate to a record high of 75.7 percent. Still, wage growth eased to a six-month low.

There were 1.41 million unemployed people, 12,000 fewer than for December 2017 to February 2018 and 84,000 fewer than for a year earlier. The unemployment rate was 4.2 percent, down from 4.5 percent for a year earlier and the joint lowest since 1975.

There were 32.40 million people in work, 137,000 more than for December 2017 to February 2018 and 388,000 more than for a year earlier. The employment rate was 75.7 percent, higher than for a year earlier (74.9 percent) and the highest since comparable records began in 1971.

There were 8.64 million people aged from 16 to 64 years who were economically inactive, 86,000 fewer than for December 2017 to February 2018 and 184,000 fewer than for a year earlier. The inactivity rate was 21.0 percent, lower than for a year earlier (21.5 percent) and the joint lowest since comparable records began in 1971.

Latest estimates show that average weekly earnings for employees in Great Britain in nominal terms (that is, not adjusted for price inflation) increased by 2.7 percent excluding bonuses, and by 2.5 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 0.4 percent excluding bonuses, and by 0.2 percent including bonuses, compared with a year earlier.


Tuesday July 10 2018
UK Trade Deficit Narrows in May
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The total UK trade deficit narrowed by GBP 0.3 billion to GBP 2.79 billion in May 2018 from a downwardly revised GBP 3.09 billion in the previous month.

Exports of goods and services from the UK increased 2.8 percent to GBP 51.85 billion in May from GBP 50.41 billion in the previous month, due to higher sales of goods (4.1 percent), in particular fuels (8 percent), machinery & transport equipment (6.5 percent), miscellaneous manufactures (3.5 percent) and chemicals (2.3 percent). Also, exports of services advanced 1.4 percent.

Among major trading partners, exports of goods to the EU went up 0.6 percent, as sales increased mainly to Germany (2.8 percent), France (7 percent), Ireland (5.3 percent) and Italy (0.3 percent); while there was a decline in exports to the Netherlands (-9.6 percent), Belgium (-3.1 percent) and Spain (-0.4 percent). Also, sales to non-EU countries jumped 7.7 percent, namely to the US (11.3 percent), China (38.6 percent), Canada (16.9 percent) and Switzerland (30.7 percent). Exports were lower for Hong Kong (-14 percent), South Korea (-13.8 percent) and Japan (-2.4 percent).

Imports rose at a softer 2.1 percent to an all-time high of GBP 54.64 billion in May from GBP 54.64 billion in the previous month. The increase was driven by a 2.7 percent rise in purchases of goods, mainly fuels (8.6 percent), material manufactures (7.4 percent), food & live animals (5.5 percent), chemicals (4.4 percent), miscellaneous manufactures (2.6 percent), and machinery & transport equipment (2 percent). Also, there was a 0.4 percent gain in imports of services.

Among trading partners, imports of goods from the EU grew 4.1 percent, mainly from Germany (1.1 percent), Belgium (16.1 percent), Spain (2.3 percent) and Ireland (1.6 percent). However, there was a decline in imports from the Netherlands (-0.6 percent), France (-1.7 percent) and Italy (-0.9 percent). In addition, purchases from non-EU countries went up 1 percent, as imports increased the most from the US (1.8 percent), China (2.9 percent) and India (15.6 percent); while those from Norway (-7.4 percent), Japan (-6.5 percent) and Turkey (-7.2 percent) dropped sharply.

In the three months to May 2018, the trade deficit widened GBP 5.0 billion to GBP 8.3 billion. This was due to a GBP 5.0 billion widening of the trade in goods deficit, resulting from a combination of falling goods exports (GBP 3.1 billion) and rising goods imports (GBP 1.9 billion). Services imports and exports mostly offset each other as both increased by around GBP 0.5 billion, resulting in a relatively small decline in the trade in services surplus.


Friday June 29 2018
UK Q1 GDP Annual Growth Confirmed at Near 6-Year Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The gross domestic product in the United Kingdom expanded 1.2 percent year-on-year in the first quarter of 2018, unrevised from the second estimate and following a downwardly revised 1.3 percent growth in the previous period. It was the weakest pace of expansion since the second quarter of 2012, due to a slowdown in both household consumption and fixed investment.

On the expenditure side, household expenditure rose at a softer 1.2 percent in the first quarter, compared with 1.5 percent in Q4; and gross fixed capital formation went up at a slower 1.5 percent (vs 4 percent in Q4) as business investment growth eased to 2 percent (vs 2.3 percent in Q4). Meanwhile, government spending grew by 1.2 percent, faster than 0.2 percent in the previous period.

Exports jumped 2.4 percent, following a 3.2 percent gain in Q4; while imports rose at a slower 0.6 percent, after increasing by 1.7 percent the previous period. As a result, the trade deficit narrowed to £3.174 billion from £5.711 billion in Q1 2017. 

On the production side, the service industries expanded 1.2 percent (vs 1.3 percent in Q4), as output rose for: distribution, hotels and restaurants (0.9 percent vs 0.5 percent); transport storage and communications (2.9 percent, the same as in Q4); business services and finance (2 percent vs 2.3 percent); and government and other services (0.1 percent, the same as in Q4). Industrial production went up 2.4 percent (vs 2.3 percent in Q4), as output rose for: manufacturing (2.5 percent vs 3.1 percent); electricity, gas, steam and air conditioning supply (4.1 percent vs -1.4 percent); and water supply, sewerage, waste management and remediation activities (1.3 percent vs 1.8 percent). By contrast, mining and quarrying fell 0.1 percent (vs 0.9 percent in Q4). Construction expansion slowed to 0.3 percent from 4.4 percent in Q4.