Thursday May 25 2017
UK Q1 GDP Growth Revised Down To 2% YoY
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

UK's gross domestic product expanded 2 percent year-on-year in the first quarter of 2017, following a 1.9 percent growth in the previous period but below the preliminary estimate of 2.1 percent. Fixed investment rose at a faster pace as business investment increased for the first time in over a year while household spending slowed and net trade contributed negatively.

On the expenditure side, gross fixed capital formation went up at a faster 2.2 percent (1 percent in Q4), as business investment rebounded by 0.8 percent, following four consecutive months of decline. Also, household expenditure grew by 2.6 percent (2.9 percent in Q4) and government spending by 0.8 percent (0.4 percent in Q4).

Imports jumped 4.3 percent, following a 2 percent gain in Q4; while exports rose at a slower 2.1 percent, after rising by 0.6 percent the previous period. As a result, the trade deficit widened to £16.4 billion from £12.8 billion in Q1 2016. 

On the production side, the service industries expanded 2.4 percent (2.9 percent in Q4), as output rose for: Distribution, hotels and restaurants (3.5 percent from 6 percent in Q4); transport storage and communications (3.8 percent from 4.4 percent); business services and finance (2.4 percent from 2.3 percent); and government and other services (1.1 percent from 1.2 percent). Industrial production rose at a faster 2.3 percent (1.9 percent in Q4), as manufacturing growth accelerated (2.6 percent from 2 percent in Q4), and mining and quarrying rebounded (1.4 percent from -3 percent). Meanwhile, output rose at a slower pace for electricity, gas, steam and air conditioning supply (0.5 percent from 5.4 percent in Q4); and water supply, sewerage, waste management and remediation activities (3.5 percent from 5.3 percent) . Construction expansion slowed to 1.9 percent from 2.8 percent in Q4.




Thursday May 25 2017
UK Q1 GDP Growth Revised Down To 0.2%
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK economy advanced 0.2 percent on quarter in the three months to March of 2017, below the preliminary estimate of 0.3 percent, mainly due to broad-based downward revisions within the services sector. On the expenditure side, household spending slowed while business investment rebounded.

From the expenditure side, the positive contribution to GDP came from gross capital formation (1.2 percentage points) and household final consumption expenditure (0.2 percentage points). In contrast, net trade subtracted 1.4 percentage points from the growth.

Gross fixed capital formation grew by 1.2 percent (from 0.1 percent in Q4 2016), boosted by a rebound in business investment (0.6 percent from -0.9 percent in Q4) amid positive contributions from other machinery and intellectual property products; partly offset by other buildings and structures. Also, government spending expanded by 0.8 percent after showing no growth in Q4; while household expenditure advanced by only 0.3 percent, the lowest quarter-on-quarter growth since Q4 2014, after rising by 0.7 percent in the previous period.

Imports jumped 2.7 percent following a 1 percent decline in the previous period, with a notable contribution from transport equipment, machinery and chemicals; while exports shrank 1.6 percent after climbing by 4.6 percent in Q4. As a result, the trade deficit widened to £16.4 billion from £10.0 billion in Q4. 

From the production side, the service industries increased by 0.2 percent following a 0.8 percent gain in Q4. The main contributor to the slowdown in services was the distribution, hotels and restaurants sector, which decreased by 0.6 percent (2 percent in Q4), dragged by retail trade and accommodation services partly due to rising prices. Also, the transport, storage and communications industries decreased by 0.2 percent (0.8 percent in Q4). Meanwhile, output rose for business services and finances (0.6 percent from 0.5 percent in Q4) and government and other services (0.4 percent from 0.3 percent). Industrial output increased by 0.1 percent (0.4 percent in Q4), as output expanded for: manufacturing (0.3 percent from 1.2 percent in Q4); mining and quarrying, including oil and gas extraction (1.8 percent from -6.9 percent); and water supply and sewerage (0.7 percent from 0.9 percent). By contrast, output from electricity, gas, steam and air conditioning supply fell 4.3 percent (from 4 percent in Q4). Construction output advanced by 0.2 percent, following a 1 percent gain the previous period; and agriculture grew 0.3 percent, after a 1 percent growth in Q4.

Compared with the first quarter of 2016, the GDP grew by 2 percent, also below a flash figure of 2.1 percent.




Wednesday May 17 2017
UK Jobless Rate Hits 42-Year Low
ONS | Yekaterina Guchshina | yekaterina@tradingeconomics.com

UK unemployment rate fell to 4.6 percent in the three months to March 2017 from 4.7 percent in the previous period and below market expectations of 4.7 percent. It was the lowest jobless rate since July of 1975. The employment rate rose to a fresh all-time high of 74.8 percent, as the number of people in work went up by 122 thousand. Meanwhile, excluding the bonuses, pay adjusted for price inflation decreased by 0.2 percent from the previous year, the first decline since the third quarter of 2014.

Estimates from the Labour Force Survey show that, between October to December 2016 and January to March 2017, the number of people in work increased, the number of unemployed people fell, and the number of people aged from 16 to 64 not working and not seeking or available to work (economically inactive) also fell.

There were 1.54 million unemployed people (people not in work but seeking and available to work), 53,000 fewer than for October to December 2016 and 152,000 fewer than for a year earlier. The unemployment rate (the proportion of those in work plus those unemployed, that were unemployed) was 4.6%, down from 5.1% for a year earlier and the lowest since 1975. 

There were 31.95 million people in work, 122,000 more than for October to December 2016 and 381,000 more than for a year earlier. The employment rate (the proportion of people aged from 16 to 64 who were in work) was 74.8%, the highest since comparable records began in 1971. 

There were 8.83 million people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 40,000 fewer than for October to December 2016 and 82,000 fewer than for a year earlier. The inactivity rate (the proportion of people aged from 16 to 64 who were economically inactive) was 21.5%, down from 21.8% for a year earlier and the joint lowest since comparable records began in 1971.

Average weekly earnings for employees in nominal terms increased by 2.4 percent including bonuses, and by 2.1 percent excluding bonuses, compared with a year earlier. In real terms (that is, adjusted for price inflation), average weekly earnings increased by 0.1 percent including bonuses, and fell by 0.2 percent excluding bonuses, compared with a year earlier.






Tuesday May 16 2017
UK Inflation Rate Highest Since 2013
ONS | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in the United Kingdom increased 2.7 percent year-on-year in April of 2017, following a 2.3 percent rise in each of the previous two months and above market expectations of 2.6 percent. It is the highest inflation rate since September of 2013, mainly due to rising air fares and electricity prices. The inflation rate has been on an upward trend since the Brexit vote last year due to a fall in the sterling value.

Year-on-year, main upward contributions came from prices of transport (6.4 percent vs 4.7 percent in March); restaurants and hotels (3.1 percent vs 2.9 percent); housing and utilities (1.6 percent vs 1.1 percent in March); food and non-alcoholic beverages (1.5 percent vs 1.2 percent) and clothing and footwear (2.4 percent vs 0.9 percent). In contrast, inflation slowed for recreation and culture (1 percent vs 1.6 percent) and miscellaneous goods and services (1.7 percent vs 1.8 percent). 

On a monthly basis, consumer prices went up 0.5 percent, higher than 0.4 percent in March and forecasts of 0.4 percent. Air fares were the main contributors to the increase, although this balanced out a downward effect of similar magnitude in March 2017, due to Easter falling later than last year. Rising prices for clothing, vehicle excise duty and electricity also contributed to the increase in the rate. These upward contributions were partially offset by a fall in motor fuel prices between March and April 2017.

The core index which excludes prices of energy, food, alcohol and tobacco rose 2.4 percent year-on-year, the most since March of 2013 and above expectations of 2.2 percent. 





Thursday May 11 2017
UK Leaves Monetary Policy Unchanged
BoE | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Bank of England Monetary Policy Committee voted by a majority of 7-1 to maintain Bank Rate at a record low of 0.25 percent on May 11th, 2017, as widely expected, saying the continuing suitability of the current policy stance depends on the trade-off between above-target inflation and slack in the economy, as well as the prospects for inflation to return sustainably to target. The MPC was unanimous in its decision to keep the stock of UK government bond purchases unchanged at £435 billion.

Excerpts from the Monetary Policy Summary:

Aggregate demand slowed markedly in 2017 Q1, and the MPC’s central projection contained in the May Inflation Report is now for quarterly growth to remain around current rates, and close to trend. The slowdown appears to be concentrated in consumer-facing sectors, partly reflecting the impact of sterling’s past depreciation on household income and spending. The Committee judges that consumption growth will be slower in the near term than previously anticipated before recovering in the latter part of the forecast period as real income picks up.  

In the MPC’s central forecast, weaker consumption this year is largely balanced by rising net trade and investment.  The outlook for global activity continues to improve. Business surveys and Bank Agents’ reports imply that business investment growth is likely to be higher in 2017 than previously projected.  The stronger global outlook and the level of sterling are providing incentives for many exporters to renew and increase capacity.

CPI inflation has risen above the MPC’s 2% target as the depreciation of sterling has begun to feed through to consumer prices. This impact has been offset to some extent by continued subdued growth in domestic costs. In particular, wage growth has been notably weaker than expected. The MPC expects inflation to rise further above the target in the coming months, peaking a little below 3% in the fourth quarter.

At its May meeting, seven members thought that the current monetary policy setting remained appropriate to balance the demands of the Committee’s remit. Kristin Forbes considered it appropriate to increase Bank Rate by 25 basis points.

As the Committee has previously noted, there are limits to the extent to which above-target inflation can be tolerated. The continuing suitability of the current policy stance depends on the trade-off between above-target inflation and slack in the economy, as well as the prospects for inflation to return sustainably to target. These projections depend importantly on three main judgements: that the lower level of sterling continues to boost consumer prices broadly as projected, and without adverse consequences for inflation expectations further ahead; that regular pay growth remains modest in the near term but picks up significantly over the forecast period; and that more subdued household spending growth is largely balanced by a pickup in other components of demand. 

In judging the appropriate policy stance, the Committee will be monitoring closely the incoming evidence regarding these and other factors. Monetary policy can respond in either direction to changes to the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target. On the whole, the Committee judges that, if the economy follows a path broadly consistent with the May central projection, then monetary policy could need to be tightened by a somewhat greater extent over the forecast period than the very gently rising path implied by the market yield curve underlying the May projections.




Thursday May 11 2017
UK Trade Deficit Widens As Imports Hit New Record
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK’s deficit on trade in goods and services widened by £2.3 billion to £4.9 billion in March 2017 from a downwardly revised £2.7 billion in February. Imports increased in the month by £2.9 billion to a new record high of £53.9 billion, due to an increase in purchases of goods from both EU and non-EU countries. Exports increased by £0.6 billion to £49.0 billion.

Imports of goods and services rose by £2.9 billion to a new record high of £53.9 billion from £51.0 billion in the previous month, mainly due to an increase in purchases of goods. At the commodity level, the main contributors to this increase were chemicals, oil, cars and mechanical machinery. Among trading partners, imports of goods from the EU increased by 5.7 percent, mainly from the Netherlands (14.5 percent), Spain (11.7 percent), Sweden (5.2 percent) and Germany (4.4 percent). Imports from non-EU countries also rose by 10.6 percent, boosted by higher purchases from the US (13.4 percent), China (7.1 percent) and Norway (6 percent).

Exports of goods and services increased by £0.6 billion to £49.0 billion in March from £48.4 billion in February, due to an increase of £1.1 billion in exports of trade in goods while exports of services fell £0.4 billion. Sales of goods to the EU rose by 6.1 percent, mainly to France (12 percent), Germany (7.2 percent) and Ireland (6.8 percent). Also, exports to non-EU countries grew by 1.8 percent, boosted by higher sales to China (9.2 percent) and the US (2.3 percent).

On the price front, export and import prices increased by 1.5 percent and 1.4 percent respectively, with the value of sterling decreasing by 1.3 percent in March 2017 compared with the February 2017 average. However, it remains 10.7 percent lower when compared with March 2016.

Between the fourth quarter of 2016 and the first three months of 2017, the total trade deficit (goods and services) widened by £5.7 billion to £10.5 billion; this followed a sharp narrowing in the previous period. The widening of the deficit reflected a rise in imports (3.3 percent) and a fall in exports (-0.5 percent) over the period. This was mainly due to increases in purchases of machinery and transport equipment (mainly mechanical machinery and cars), oil and chemicals.




Friday April 28 2017
UK Economy Expands 2.1% YoY In Q1
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy grew 2.1 percent, accelerating from a 1.9 percent expansion in the previous period but missing market expectations of a 2.2 percent gain, a preliminary estimate showed. Total production increased further, boosted mainly by manufacturing; while output grew at a slower pace for both services and construction.

Total production increased 2.5 percent after rising 1.9 percent in Q4 2016. Within the production aggregate output grew for: Manufacturing (2.8 percent from 2 percent in Q4); mining and quarrying (0.8 percent from -3 percent in Q4); electricity, gas, steam and air conditioning supply (1.7 percent from 5.4 percent in Q4); and water supply, sewerage, waste management and remediation activities (3.3 percent from 5.3 percent in Q4).

Services advanced 2.5 percent, following a 2.9 percent growth in Q4 2016. Within the services aggregate output expanded for: distribution, hotels and restaurants (3.6 percent from 6 percent in Q4); transport, storage and communications (3.8 percent from 4.4 percent in Q4); business services and finance (2.6 from 2.3 percent in Q4); government and other services (1.2 percent, the same as in Q4).

Construction output was estimated to have increased by 1.9 percent, following a gain of 2.8 percent during Q4.


Friday April 28 2017
UK Q1 GDP Growth Weaker Than Expected
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy advanced 0.3 percent on quarter in the three months to March 2017, easing from a 0.7 percent growth in the previous period and below market expectations of a 0.4 percent expansion, a preliminary estimate showed. It was the slowest rate of growth since the first quarter of 2016, as services output expanded at a slower pace.

The services aggregate grew 0.3 percent in the first quarter after rising by 0.8 percent in the previous period; and contributed 0.23 percentage points to growth. Production, construction and agriculture contributed 0.04, 0.01 and 0.00 percentage points to the headline figure respectively.

Within the services aggregate, two of the four main sectors decreased in the first quarter of 2017. The main contributor to the slowdown in services was the distribution, hotels and restaurants sector, which decreased by 0.5 percent (2 percent in Q4 2016), contributing negative 0.07 percentage points to quarter-on-quarter GDP growth. Retail trade and accommodation services were the main contributors to the negative growth in this sector, due in part to prices increasing more than spending. These falls were partially offset by an increase in food and beverage service activities, which grew by 2.7 percent. The transport, storage and communications industries decreased by 0.2 percent (0.8 percent in Q4), dragged by falls in publishing activities, telecommunications and computer programming activities.

By contrast, government and other services grew by 0.5 percent (from 0.3 percent in Q4), with human health activities and education being significant contributors, reflecting their large weights within GDP. Business services and finance grew by 0.7 percent (from 0.5 percent in Q4), with accounting activities and travel agency activities both performing strongly in this quarter.

Within the production aggregate: manufacturing increased by 0.5 percent (from 1.2 percent in Q4), due mainly to a large rise in the manufacture of motor vehicles industry; mining and quarrying increased by 1.3 percent (from -6.9 percent in Q4); and water supply, sewerage, waste management and remediation activities increased by 0.5 percent (from 0.9 percent in Q4). However, these positive growths were partially offset by a 3.2 percent decrease in electricity, gas, steam and air conditioning supply (from 4 percent in Q4).

Construction output was estimated to have increased by 0.2 percent, following a growth of 1 percent during Q4 2016.

Agriculture output expanded 0.3 percent following a growth of 1 percent in the previous period.  Agriculture is the smallest of the main industrial groups with a weight of less than 1 percent in the output measure of GDP. 

Compared with the same quarter of 2016, the economy grew 2.1 percent, accelerating from a 1.9 percent expansion in the previous period but missing market expectations of a 2.2 percent gain.


Wednesday April 12 2017
UK Unemployment Rate Steady At Near 12-Year Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

UK unemployment rate held at an almost 12-year low of 4.7 percent in the three months to February 2017, in line with market expectations. The employment rate stood at an all-time high of 74.6 percent as the number of people in work rose by 39 thousand.

Estimates from the Labour Force Survey show that, between September to November 2016 and the three months to February 2017, the number of people in work increased, the number of unemployed people fell, and the number of people aged from 16 to 64 not working and not seeking or available to work (economically inactive) also fell.

There were 1.56 million unemployed people (people not in work but seeking and available to work), 45,000 fewer than for September to November 2016 and 141,000 fewer than for a year earlier. The unemployment rate was 4.7 percent, down from 5.1 percent for a year earlier. It was the lowest jobless rate since July to September 2005. The unemployment rate is the proportion of the labour force (those in work plus those unemployed) that were unemployed.

There were 31.84 million people in work, 39,000 more than for September to November 2016 and 312,000 more than for a year earlier. The employment rate (the proportion of people aged from 16 to 64 who were in work) was 74.6 percent, the joint highest since comparable records began in 1971.

There were 8.88 million people aged from 16 to 64 who were economically inactive (not working and not seeking or available to work), 10,000 fewer than for September to November 2016 and 36,000 fewer than for a year earlier. The inactivity rate (the proportion of people aged from 16 to 64 who were economically inactive) was 21.6 percent, slightly lower than for September to November 2016 (21.7 percent) and for a year earlier (21.8 percent).

Average weekly earnings for employees in nominal terms increased by 2.3 percent including bonuses, and by 2.2 percent excluding bonuses, compared with a year earlier. In real terms (that is, adjusted for price inflation), average weekly earnings increased by 0.2 percent including bonuses, and by 0.1 percent excluding bonuses, compared with a year earlier.


Tuesday April 11 2017
UK Inflation Rate Steady At 3-1/2-Year High
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer prices in the United Kingdom rose by 2.3 percent in the year to March 2017, the same pace as in February and in line with market expectations. The inflation rate remained at its highest level since September 2013, mainly boosted by rising prices for food, alcohol and tobacco, clothing and footwear, and miscellaneous goods and services.

The main upward contributors to change in the annual rate were: Food and non-alcoholic beverages (1.2 percent from 0.2 percent); alcoholic beverages and tobacco (4.9 percent from 2.8 percent); clothing and footwear (0.9 percent from -0.1 percent); and miscellaneous goods and services (1.8 percent from 1.1 percent). Prices also rose for: Transport (4.7 percent from 6.9 percent); recreation and culture (inflation steady at 1.6 percent); restaurants and hotels (2.9 percent from 3.2 percent); and housing, water, electricity, gas and other fuels (1.1 percent from 0.7 percent).

The consumer prices index including owner occupiers’ housing costs (CPIH) also rose by 2.3 percent in March 2017, the same pace as in February.

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, fell to 1.8 percent in March from 2 percent in February and below market consensus of 1.9 percent.

On a monthly basis, consumer prices went up 0.4 percent after rising by 0.7 percent in February and above market expectations of a 0.3 percent gain. Prices rose for recreation and culture (0.4 percent), restaurants and hotels (0.2 percent), housing and utilities (0.1 percent) and food and non-alcoholic beverages (0.4 percent), while cost of transport fell (-0.5 percent).