Wednesday November 15 2017
UK Unemployment Rate Matches Forecasts
ONS | Joana Taborda | joana.taborda@tradingeconomics.com

The jobless rate in the United Kingdom came in at 4.3 percent in the three months to September of 2017, in line with market expectations and remaining the lowest rate since 1975. On the other hand, employment declined the most in nearly two years and real wages continued to decrease.

The number of unemployed people fell by 59,000 to 1.42 million in the three months to September 2017 compared with the three months to June 2017. By age category, unemployment decreased across all age groups except for those aged 65 and over.

The number of people in work decreased for the first time since August to October 2016. The total employment level fell by 14,000 on the previous quarter to 32.06 million. For men, employment fell by 37,000 whereas for women it increased by 23,000. The number of employees decreased by 10,000 on the previous quarter whereas the number of self-employed increased by 4,000. By age category, employment increased for three age groups: 25 to 34, 50 to 64 and 65 and over, while employment decreased for three age groups: 16 to 17, 18 to 24 and 35 to 49. 

In the three months to September 2017, a slight fall in employment was accompanied by an increase in the inactivity level of 117,000. The inactivity rate increased by 0.3 percentage points to 21.6 percent. Total weekly hours decreased by 5.3 million to 1.03 billion. Average actual weekly hours for all workers decreased by 0.2 to 32.1 hours. The average hours for part-time workers remained at 16.3 hours.

Nominal earnings increased by 2.2 percent (excluding and including bonuses) in the three months to September 2017 compared with a year earlier, however, it fell by 0.5 percent (excluding bonuses) and 0.4 percent (including bonuses) in real terms. This is because its rate of increase was less than that of the higher underlying inflation. 




Tuesday November 14 2017
UK Inflation Rate Remains at 5-Year High
ONS | Joana Taborda | joana.taborda@tradingeconomics.com

Consumer prices in the UK increased 3 percent yoy in October, the same as in September and below expectations of 3.1 percent. Still, it was the highest inflation rate since March 2012, with prices of food, housing, utilities and recreational goods making the biggest upward contribution.

Year-on-year, prices rose faster for housing and utilities (2.3 percent compared to 2.1 percent in September); recreation and culture (2.8 percent compared to 2.5 percent); food and non-alcoholic beverages (4 percent compared to 3 percent, the highest in four years) and health (3.4 percent compared to 2.4 percent). On the other hand, the inflation was steady for restaurants and hotels (3.1 percent); alcoholic beverages and tobacco (4.3 percent) and a slowdown was seen for transport (4 percent compared to 4.2 percent); miscellaneous goods and services (0.9 percent compared to 1.4 percent); clothing and footwear (3.2 percent compared to 3.3 percent); furniture, household equipment and maintenance (3.1 percent compared to 4 percent); communication (1.7 percent compared to 2 percent) and education (2.8 percent compared to 2.9 percent). 

On a monthly basis, consumer prices edged up 0.1 percent, below 0.3 percent in September and forecasts of 0.2 percent. Rising prices for food and, to a lesser extent, recreational goods provided the largest upward contributions, which were offset by falling motor fuel and furniture prices, along with owner occupiers’ housing costs, which remained unchanged. 

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, stood at 2.7 percent in October, unchanged from the previous month's five-year high and below market consensus of 2.8 percent.




Friday November 10 2017
UK Trade Deficit Narrows as Exports Hit Record High
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK’s deficit on trade in goods and services narrowed by GBP 0.70 billion to GBP 2.75 billion in September 2017 from a downwardly revised GBP 3.46 billion gap in August and way below market expectations of a GBP 4.60 billion gap. It was the smallest trade deficit since May.

Exports of goods and services from the UK increased 2.2 percent to an all-time high of GBP 51.58 billion in September from GBP 50.49 billion in August. Exports of goods jumped 4.5 percent mainly due to higher sales of unspecified goods (including non-monetary gold) while exports of services fell 0.8 percent. Among major trading partners, exports of goods to the EU grew 1.2 percent, as sales increased mainly to France (7.3 percent), the Netherlands (5.0 percent), Spain (4.4 percent), Italy (1.3 percent) and Germany (1.0 percent) while exports fell to Belgium & Luxembourg (-3.2 percent) and Ireland (-3.1 percent). Also, exports of goods to non-EU countries climbed 7.9 percent, namely to Hong Kong (57.4 percent), Switzerland (50.6 percent), China (32.4 percent) and Japan (7.6 percent), while exports to the US dropped 1.7 percent.

Imports rose at a slower 0.7 percent to GBP 54.34 billion from GBP 53.94 billion in the previous month, boosted by a 0.4 percent increase in purchases of goods and a 1.6 percent rise in imports of services. Among trading partners, imports of goods from the EU increased 1.2 percent, mainly from Spain (8.1 percent), Italy (4.2 percent), Germany (3.9 percent), and Belgium & Luxembourg (2.7 percent), while purchases fell from the Netherlands (-5.6 percent) and France (-1.5 percent). On the other hand, purchases from non-EU countries fell 0.5 percent, as imports decreased the most from China (-1.4 percent) and the US (-0.8 percent), while purchases from Norway rose 6.8 percent.

In the three months to September 2017, the trade deficit widened by GBP 3.0 billion to GBP 9.5 billion, largely due to an increase in imports of goods, particularly of machinery, unspecified goods (including non-monetary gold) and fuels. This was partially offset by a decrease in imports of aircraft. Imports of goods from both EU and non-EU countries increased between the three months to June 2017 and the three months to September 2017; exports to EU countries increased by GBP 0.9 billion, while exports to non-EU countries fell by GBP 1.7 billion in the same period.




Thursday November 02 2017
BoE Hikes Key Rate to 0.5%
BoE | Joana Taborda | joana.taborda@tradingeconomics.com

The Bank of England raised its benchmark Bank Rate by 25bps to 0.5 percent on November 2nd 2017, in line with market expectations, signalling the beginning of a gradual tightening process. It is the first rate increase in a decade after inflation stayed well above the 2 percent target for the eighth straight month in September amid a weaker sterling and higher energy prices. Policymakers said the inflation is expected to fall in 2018, conditioned on the gently rising path of the Bank Rate. The Monetary Policy Committee (MPC) voted by a majority of 7-2 to increase the Bank Rate but 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:

The MPC’s outlook for inflation and activity in the November Inflation Report is broadly similar to its projections in August. In the MPC’s central forecast, conditioned on the gently rising path of Bank Rate implied by current market yields, GDP grows modestly over the next few years at a pace just above its reduced rate of potential. Consumption growth remains sluggish in the near term before rising, in line with household incomes. Net trade is bolstered by the strong global expansion and the past depreciation of sterling. Business investment is being affected by uncertainties around Brexit, but it continues to grow at a moderate pace, supported by strong global demand, high rates of profitability, the low cost of capital and limited spare capacity.

The decision to leave the European Union is having a noticeable impact on the economic outlook. The overshoot of inflation throughout the forecast predominantly reflects the effects on import prices of the referendum-related fall in sterling. Uncertainties associated with Brexit are weighing on domestic activity, which has slowed even as global growth has risen significantly. And Brexit-related constraints on investment and labour supply appear to be reinforcing the marked slowdown that has been increasingly evident in recent years in the rate at which the economy can grow without generating inflationary pressures.

Monetary policy cannot prevent either the necessary real adjustment as the United Kingdom moves towards its new international trading arrangements or the weaker real income growth that is likely to accompany that adjustment over the next few years. It can, however, support the economy during the adjustment process. The MPC’s remit specifies that, in such exceptional circumstances, the Committee must balance any trade-off between the speed at which it intends to return inflation sustainably to the target and the support that monetary policy provides to jobs and activity. 

The steady erosion of slack has reduced the degree to which it is appropriate for the MPC to accommodate an extended period of inflation above the target. Unemployment has fallen to a 42-year low and the MPC judges that the level of remaining slack is limited. The global economy is growing strongly, domestic financial conditions are highly accommodative and consumer confidence has remained resilient. In line with the framework set out at the time of the referendum, the MPC now judges it appropriate to tighten modestly the stance of monetary policy in order to return inflation sustainably to the target. Accordingly, the Committee voted by 7-2 to raise Bank Rate by 0.25 percentage points, to 0.5%. Monetary policy continues to provide significant support to jobs and activity in the current exceptional circumstances. All members agree that any future increases in Bank Rate would be expected to be at a gradual pace and to a limited extent.

There remain considerable risks to the outlook, which include the response of households, businesses and financial markets to developments related to the process of EU withdrawal. The MPC will respond to developments as they occur insofar as they affect the behaviour of households and businesses, and the outlook for inflation. The Committee will monitor closely the incoming evidence on these and other developments, including the impact of today’s increase in Bank Rate, and stands ready to respond to changes in the economic outlook as they unfold to ensure a sustainable return of inflation to the 2% target.




Wednesday October 25 2017
UK Q3 Annual GDP Growth Weakest Since Early 2013
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy advanced 1.5 percent year-on-year in the third quarter of 2017, the same pace as in the previous period and better than market expectations of 1.4 percent, the preliminary estimate showed. Still, it was the weakest pace of expansion since Q1 2013, as output growth slowed for services and construction, while industrial production increased at faster pace.

Services advanced 1.5 percent, following an increase of 1.8 percent in the previous period. Within the services aggregate output expanded for: Distribution, hotels and restaurants (2.3 percent from 3.1 percent in Q2); transport, storage and communications (1.2 percent from 3.4 percent in Q2); business services and finance (1.6 percent from 1.3 percent in Q2); and government and other services (0.8 percent from 1.1 percent in Q2).

Construction output was estimated to have increased by 2.8 percent, following a gain of 4.1 percent during the previous period.

Total production grew 1.6 percent after increasing 0.2 percent in Q2. Within the production aggregate output rose for: Manufacturing (2.7 percent from 0.9 percent in Q2); and water supply, sewerage, waste management and remediation activities (2.3 percent from 2.4 percent). Meanwhile, mining and quarrying contracted 4.1 percent (-0.9 percent in Q2) and electricity, gas, steam and air conditioning supply shrank 0.7 percent (-4.8 percent in Q2).




Wednesday October 25 2017
UK Q3 GDP Growth Beats Expectations
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy advanced 0.4 percent on quarter in the three months to September 2017, beating market expectations of 0.3 percent, the preliminary estimate showed. The expansion was mainly driven by services boosted by computer programming, motor trades and retail trade. Also, manufacturing returned to growth after a weak performance in the previous period while construction contracted for the second quarter in a row.

The services aggregate was the main driver to the growth in GDP, contributing 0.29 percentage points. Production returned to growth, recording a rise of 1 percent in Q3, contributing 0.13 percentage points to GDP. Agriculture grew by 1 percent, contributing 0.01 percentage points to GDP due to the low industry weight. Offsetting these growths, construction contracted by 0.7 percent and contributed negative 0.05 percentage points.

Services expanded by 0.4 percent, the same pace as in the previous period. The main contributor to growth was the business services and finance sector, which increased by 0.6 percent (from 0.1 percent in Q2). Growth in this sector was broad-based, with employment activities being the largest contributor, recording an increase of 3.5 percent after a fall of 2.4 percent in Q2. Transport, storage and communications sector advanced by 0.1 percent (from 1.2 percent in Q2), boosted by computer programming activities, which rose by 1.9 percent, offsetting decreases in publishing activities and motion picture activities. Distribution, hotels and catering expanded by 0.4 percent, the same as in Q2, with wholesale trade and repair of motor vehicles being the main contributor to the growth. Government and other services rose by 0.1 percent (from 0.3 percent in Q2), with human health activities and education being significant contributors, reflecting their large weights within GDP.

Within production (1 percent from -0.3 percent in Q2), manufacturing advanced by 1 percent (-0.3 percent in Q2), due mainly to growth across a number of industries, including the manufacture of transport equipment, other manufacturing and repair and the manufacture of machinery and equipment. In addition, mining and quarrying went up by 1.5 percent (0.6 percent in Q2); electricity, gas, steam and air conditioning supply grew by 0.4 percent (-0.3 percent in Q2); and water supply, sewerage, waste management and remediation activities increased by 0.4 percent (-1 percent in Q2)

Construction output was estimated to have decreased by 0.7 percent, following a fall of 0.5 percent during Q2.

Agriculture output was estimated to have increased by 1 percent, rebounding from a drop of 0.1 percent in Q2. 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 1.5 percent, also better than market expectations of 1.4 percent.




Wednesday October 18 2017
UK Unemployment Rate at 42-Year Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

UK unemployment rate declined to 4.3 percent in the three months to August of 2017 from 4.5 percent in the March to May period, in line with market expectations. It was the lowest jobless rate since 1975, as the number of unemployed continued to fall.

There were 1.44 million unemployed people, 52,000 fewer than for March to May 2017 and 215,000 fewer than for a year earlier. The unemployment rate was 4.3 percent, down from 5.0% for a year earlier and the joint lowest since 1975.

There were 32.10 million people in work, 94,000 more than for March to May 2017 and 317,000 more than for a year earlier. The employment rate was 75.1 percent, up from 74.5 percent for a year earlier.

There were 8.81 million people aged from 16 to 64 who were economically inactive, 17,000 fewer than for March to May 2017 and 13,000 fewer than for a year earlier. The inactivity rate was 21.4 percent, down slightly from a year earlier.

Latest estimates show that average weekly earnings for employees in the UK in nominal terms (that is, not adjusted for price inflation) increased by 2.2 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 fell by 0.3 percent including bonuses, and by 0.4 percent excluding bonuses, compared with a year earlier.


Tuesday October 17 2017
UK September Inflation Rate at Over 5-Year High
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer prices in the United Kingdom rose by 3 percent in the year to September 2017, as widely expected, following a 2.9 percent gain in the previous month. It was the highest inflation rate since April 2012, mainly due to rising prices of food, transport and leisure activities.

Year-on-year, prices rose further for: Food and non-alcoholic beverages (3 percent from 2.1 percent in August); transport (4.2 percent from 3.2 percent), in particular fuels and lubricants (6.1 percent from 5.1 percent); and recreation and culture (2.5 percent from 1.8 percent). Meanwhile, inflation slowed for housing, water, electricity, gas and other fuels (2.1 percent from 2.2 percent in August), restaurants and hotels (3.1 percent from 3.5 percent); clothing and footwear (3.3 percent from 4.6 percent); furniture, household equipment and maintenance (4 percent from 4.2 percent); miscellaneous goods and services (1.4 percent from 1.9 percent); alcoholic beverages and tobacco (4.3 percent from 4.5 percent); health (2.4 percent from 2.6 percent); communication (2 percent from 2.2 percent) and education (2.9 percent from 4.3 percent).

The consumer prices index including owner occupiers’ housing costs (CPIH) rose by 2.8 percent in September, up from 2.7 percent in August.

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, stood at 2.7 percent in September, unchanged from the previous month's five-year high and in line with market consensus.

On a monthly basis, consumer prices rose 0.3 percent after increasing 0.6 percent in August and in line with market forecast. Prices rose sharply for clothing and footwear (3.9 percent) and fuels and lubricants (2.1 percent).


Tuesday October 10 2017
UK August Trade Deficit Largest in 11 Months
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK’s deficit on trade in goods and services widened by GBP 1.39 billion to GBP 5.63 billion in August 2017 from an upwardly revised GBP 4.24 billion gap in July and way above market expectations of a GBP 2.80 billion gap. It was the largest trade deficit since September last year, as the goods trade gap hit a record high.

Imports of goods and services to the United Kingdom jumped by 3.2 percent to an all-time high of GBP 55.78 billion from GBP 54.08 billion in the previous month, boosted by higher purchases of basic materials (17.8 percent), semi-manufactures (10.3 percent), finished manufactures (2.5 percent) and food beverages and tobacco (1.3 percent). Among trading partners, imports of goods from the EU increased by 5.8 percent, mainly from the Netherlands (20 percent), Belgium & Luxembourg (9.7 percent), France (5 percent) and Germany (2.1 percent). Also, purchases from non-EU countries rose by 3 percent, as imports increased the most from Canada (32.9 percent), followed by the US (1 percent) and Norway (0.9 percent).

Exports increased by 0.6 percent to GBP 50.15 billion in August from GBP 49.84 billion in July, due to increases in sales of semi-manufactures (4.7 percent) and finished manufactures (2.7 percent). Among major trading partners, sales of goods to the EU grew by 2.3 percent, as sales increased mainly to Belgium & Luxembourg (6.1 percent) and Ireland (5.9 percent). Also, exports of goods to non-EU countries went up by 0.6 percent, namely to South Korea (32.5 percent) and the US (0.5 percent). By contrast, exports to China dropped 28.8 percent.

In the three months to August, the trade deficit widened by GBP 6.2 billion from the previous three-month period to GBP 13.2 billion, largely due to a switch from a surplus to a deficit on the balance of erratic commodities, such as non-monetary gold


Friday September 29 2017
UK GDP Annual Growth Revised Down to 4-Year Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy grew 1.5 percent year-on-year in the second quarter of 2017, below the second estimate of 1.7 percent and following a downwardly revised 1.8 percent expansion in the previous period. It was the lowest annual growth rate since the first quarter of 2013, as household spending and fixed investment rose at softer.

On the expenditure side, household expenditure growth eased to 1.6 percent from 2.3 percent in Q1; and fixed investment went up at a slower 2.4 percent after an increase of 3.7 percent in the previous period, of which business investment rose 2.5 percent (2.9 percent in Q1). Government spending grew by 0.5 percent (0.3 percent in Q1).

Exports jumped 4.9 percent, following a 5.6 percent gain in Q1; while imports rose at a slower 3.4 percent, after rising by 4.1 percent the previous period. As a result, the trade deficit narrowed to £9.2 billion from £10.7 billion in Q2 2016. 

On the production side, the service industries expanded 1.8 percent, the same pace as in Q1, as output rose for: Distribution, hotels and restaurants (3.1 percent from 2.9 percent); transport storage and communications (3.4 percent from 2.6 percent); business services and finance (1.3 percent from 1.7 percent); and government and other services (1.1 percent from 1 percent). Industrial production rose 0.2 percent (2.6 percent in Q1), as output rose at a slower pace for: Manufacturing (0.9 percent from 2.8 percent) and water supply, sewerage, waste management and remediation activities (2.4 percent from 5.9 percent). Meanwhile, output fell for: Electricity, gas, steam and air conditioning supply (-4.8 percent from 0.9 percent); and mining and quarrying (-0.9 percent from 0.7 percent). Construction expansion slowed to 4.1 percent from 6.9 percent in Q1.