Thursday October 10 2019
UK Trade Dedicit Narrows in August
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK trade deficit narrowed to GBP 1.55 billion in August 2019 from a revised GBP 1.68 billion in the previous month.

Exports of goods and services from the UK increased 0.9 percent from a month earlier to GBP 55.49 billion in August, following a 3.0 percent jump in July. Exports of services rose 2.6 percent, while sales of goods fell 0.5 percent, dragged by fuels (-15.4 percent), chemicals (-8.9 percent) and crude materials (-1.9 percent). Meanwhile, increases were seen in exports of food (4.6 percent), machinery & transport equipment (2.3 percent), material manufactures (5.0 percent) and miscellaneous manufactures (5.5 percent).

Among major trading partners, goods exports to the EU dropped 2.1 percent, in particular to Germany (-1.8 percent), Ireland (-1.4 percent), Italy (-5 percent) and Poland (-4.8 percent). By contrast, sales rose to France (0.6 percent), the Netherlands (4 percent), Belgium (9.7 percent), Spain (0.7 percent), Sweden (32 percent) and Denmark (1.5 percent). Exports to non-EU countries went up 0.9 percent, mostly to China (13.1 percent), Switzerland (35.4 percent), Hong Kong (12 percent), Singapore (5.9 percent) and Canada (23.2 percent). On the other hand, decreases were seen in exports to the US (-4 percent), Japan (-17.2 percent), the UAE (-4.8 percent), India (-1.3 percent) and Australia (-3.4 percent).

Imports to the UK advanced 0.6 percent from a month earlier to GBP 57.04 billion, following a 3.5 percent surge in July, mainly boosted by a 2 percent climb in services imports. Meanwhile, goods purchases edged up 0.1 percent, as an increase in purchases of food (3.5 percent) and machinery & transport equipment (4.1 percent) offset a decline in fuels (-10.2 percent), chemicals (-4 percent), material manufactures (-1.2 percent) and miscellaneous manufactures (-0.5 percent).

Among major trading partners, imports of goods from the EU advanced 1 percent, boosted by increases in purchases from Germany (2.2 percent), France (8.6 percent), Belgium (5.5 percent), Italy (0.1 percent), Spain (2.8 percent), Ireland (4.5 percent), Poland (1.8 percent) and Denmark (6.3 percent). Imports from the Netherlands and Sweden declined 3.9 percent and 9.7 percent respectively. Meanwhile, purchases from non-EU countries slumped 1 percent, due to purchases from China (-4.1 percent), Norway (-3.9 percent), Japan (-6.6 percent), Turkey (-15.8 percent) and India (-23.7 percent). Still, imports grew from the US (0.6 percent), Russia (3.3 percent), Hong Kong (1.1 percent), Vietnam (18 percent) and Switzerland (14.9 percent).




Monday September 30 2019
UK Q2 GDP Annual Growth Revised Higher
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

Britain's gross domestic product expanded 1.3 percent year-on-year in the second quarter of 2019, slightly above a preliminary estimate of 1.2 percent and compared to a revised 2.1 percent growth in the previous period . It has not been weaker since the first three months of 2018.

On the expenditure side, household expenditure rose 1.1 percent in the second quarter (vs 1.3 percent in Q1); and government spending advanced 4.0 percent (vs 2.8 percent in Q1). Meanwhile, fixed investment growth slowed to 0.3 percent (vs 0.8 percent in Q1) amid a further decline in business investment (-1.4 percent vs -1.6 percent).

Exports fell 1.4 percent, after a 2.8 percent advance in Q1; while imports dropped 0.4 percent, compared to a 14.9 percent jump in the previous period. As a result, the trade deficit widened to £10.453 billion from £−9.067 billion in Q2 2018.

On the production side, the service industries expanded 1.7 percent (vs 2.4 percent in Q1) as output rose for: distribution, hotels and restaurants (2.7 percent vs 4.7 percent); transport storage and communications (5.4 percent vs 6.5 percent); business services and finance (0.3 percent vs 0.8 percent); and government and other services (1.4 percent vs 1.6 percent). Industrial production fell 0.9 percent (vs 0.2 percent in Q1), as output contracted for manufacturing (-1.3 percent vs 0.9 percent) and mining and quarrying (-0.3 percent vs 5.8 percent). By contrast, utilities output grew 0.9 percent (vs -6.9 percent in Q1) and water supply, sewerage, waste management and remediation activities rose 0.5 percent (vs -0.4 percent in Q1). Construction expansion slowed to 1.8 percent from 3.7 percent in Q1.




Monday September 30 2019
UK GDP Contraction Confirmed in Q2
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

UK gross domestic product fell 0.2 percent in the second quarter of 2019, unrevised from the previous estimate and compared to the previous period's figure of 0.6 percent. Gross capital formation contracted sharply, while private consumption, government spending and net trade contributed positively to GDP growth. On the production side, industrial output fell the most since the fourth quarter of 2012.

On the expenditure side, GCF – which includes gross fixed capital formation (GFCF), changes in inventories and acquisitions less disposal of valuables – declined 15.6 percent in Q2. This largely reflects a fallback from Q1, where GCF was boosted by the build-up of stocks held by some businesses ahead of the UK’s original exit date from the European Union at the end of March, alongside notable movements in unspecified goods – which includes non-monetary gold – which fall within the valuables component of GCF. In Q2, changes in inventories (including both balancing and alignment adjustments) subtracted 1.19 percentage points from GDP growth.

GFCF decreased by an unrevised 0.9 percent, in part reflecting a 3.6 percent fall in government investment. This was driven by widespread falls. Business investment also fell by 0.4 percent in the latest quarter, driven by declines in investment in information and communication technology (ICT) equipment and other machinery and equipment.

Meanwhile, household consumption increased 0.4 percent, due in part to a 0.9 percent increase in expenditure on housing; and government consumption rose 1.1 percent, driven by increases in government spending in a number of sectors, including health and education.

The UK trade deficit narrowed sharply to £10.453 billion from a record £23.293 in the previous period. Exports dropped 6.6 percent (vs 1.6 percent in Q1) while imports plunged 13.0 percent (vs 10.3 percent in Q1).




Thursday September 19 2019
BoE Leaves Monetary Policy Unchanged
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 September policy meeting, as widely expected. The bank also reaffirmed its pledge to gradual and limited rate rises in the event of greater clarity that the economy is on a path to a smooth Brexit, and assuming some recovery in global growth.

BoE Monetary Policy Summary:

Since the MPC’s previous meeting, the trade war between the United States and China has intensified, and the outlook for global growth has weakened. Monetary policy has been loosened in many major economies. Shifting expectations about the potential timing and nature of Brexit have continued to generate heightened volatility in UK asset prices, in particular the sterling exchange rate has risen by over 3½%.

Brexit-related developments are making UK economic data more volatile, with GDP falling by 0.2% in 2019 Q2 and now expected to rise by 0.2% in Q3. The Committee judges that underlying growth has slowed, but remains slightly positive, and that a degree of excess supply appears to have opened up within companies. Brexit uncertainties have continued to weigh on business investment, although consumption growth has remained resilient, supported by continued growth in real household income. The weaker global backdrop is weighing on exports. The Government has announced a significant increase in departmental spending for 2020-21, which could raise GDP by around 0.4% over the MPC’s forecast period, all else equal.

CPI inflation fell to 1.7% in August, from 2.1% in July, and is expected to remain slightly below the 2% target in the near term. The labour market appears to remain tight, with the unemployment rate having been just under 4% since the beginning of this year. Annual pay growth has strengthened further to the highest rate in over a decade. Unit wage cost growth has also risen, to a level above that consistent with meeting the inflation target in the medium term. The labour market does not appear to be tightening further, however, with official and survey measures of employment growth softening.

For most of the period following the EU referendum, the degree of slack in the UK economy has been falling and global growth has been relatively strong. Recently, however, entrenched Brexit uncertainties and slower global growth have led to the re-emergence of a margin of excess supply. Increased uncertainty about the nature of EU withdrawal means that the economy could follow a wide range of paths over coming years. The appropriate response of monetary policy will depend on the balance of the effects of Brexit on demand, supply and the sterling exchange rate.

It is possible that political events could lead to a further period of entrenched uncertainty about the nature of, and the transition to, the United Kingdom’s eventual future trading relationship with the European Union. The longer those uncertainties persist, particularly in an environment of weaker global growth, the more likely it is that demand growth will remain below potential, increasing excess supply. In such an eventuality, domestically generated inflationary pressures would be reduced.

In the event of a no-deal Brexit, the exchange rate would probably fall, CPI inflation rise and GDP growth slow. The Committee’s interest rate decisions would need to balance the upward pressure on inflation, from the likely fall in sterling and any reduction in supply capacity, with the downward pressure from any reduction in demand. In this eventuality, the monetary policy response would not be automatic and could be in either direction.

In the event of greater clarity that the economy is on a path to a smooth Brexit, and assuming some recovery in global growth, a significant margin of excess demand is likely to build in the medium term. Were that to occur, the Committee judges that increases in interest rates, at a gradual pace and to a limited extent, would be appropriate to return inflation sustainably to the 2% target.




Wednesday September 18 2019
UK August Inflation Rate at Over 2-1/2-Year Low
ONS | Stefanie Moya | stefanie.moya@tradingeconomics.com

The annual inflation rate in the United Kingdom fell to 1.7 percent in August 2019 from 2.1 percent in the previous month and below market expectations of 1.9 percent. It was the lowest inflation rate since December 2016, amid a slowdown in cost of transport and a fall in clothing & footwear prices.

Year-on-year, prices eased for transport (1.4 percent from 1.5 percent in July); furniture, household equipment and maintenance (0.8 percent from 1.1 percent); recreation and culture (1.2 percent from 2.4 percent); restaurants and hotels (2.8 percent from 3.1 percent); health (2.4 percent from 2.6 percent); communication (3.6 percent from 3.8 percent); and alcoholic beverage and tobacco (3.3 percent from 3.8 percent). Also, cost of clothing and footwear dropped 0.9 percent, after increasing 0.4 percent in July. On the other hand, prices rose further for food and non-alcoholic beverages (1.8 percent from 1.4 percent); and miscellaneous goods and services (1.8 percent from 1.7 percent). In addition, inflation was steady for housing, water, electricity, gas and other fuels (at 2.4 percent); and education (at 3.1 percent).

The consumer prices index including owner occupiers’ housing costs (CPIH) declined to 1.7 percent in August from 2 percent in the prior month.

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, decreased to 1.5 percent, its lowest since November 2016, from 1.9 percent in July.

On a monthly basis, consumer prices advanced to 0.4 percent, following a flat reading in the previous month.




Tuesday September 10 2019
UK Jobless Rate Falls Back to Lowest since Mid-1970s
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK unemployment rate fell to 3.8 percent in the three months to July 2019, back to its joint lowest since the October to December 1974 period and slightly below market expectations of 3.9 percent. Unemployment declined by 11,000 to 1.294 million and employment rose by 31,000 to 32.777 million, below forecasts of a 53,000 increase. Meanwhile, total pay growth picked up to 4 percent, the fastest since mid-2008.

Estimated unemployment rates for both men and women aged 16 years and over have been generally falling since late 2013. For May to July 2019: the estimated UK unemployment rate for everyone was 3.8%, the lowest since October to December 1974; the estimated UK unemployment rate for men was 4.0%, relatively unchanged from a year earlier; the estimated UK unemployment rate for women was 3.6%, the joint-lowest since comparable records began in 1971 and 0.4 percentage points lower than a year earlier (4.0%).

For May to July 2019, an estimated 1.29 million people were unemployed, 64,000 fewer than a year earlier and 716,000 fewer than five years earlier. Looking in more detail at this fall of 716,000, unemployed people over the last five years: people unemployed for up to 6 months fell by 182,000 to 786,000 people out of work; for between 6 and 12 months fell by 138,000 to 180,000; the largest fall was for long-term unemployment; these are people unemployed for over one year (down 396,000 to 327,000).

Estimated employment rates for men and women aged between 16 and 64 years have generally been increasing since early 2012. For May to July 2019: the estimated employment rate for everyone was estimated at 76.1%, the joint-highest on record since comparable records began in 1971 and 0.6 percentage points higher on the year; the estimated employment rate for men was 80.2%, up 0.1 percentage points on the year but down 0.1 percentage points on the quarter; the estimated employment rate for women was 72.1%, the joint-highest since comparable records began in 1971 and 1.1 percentage points higher on the year. The increase in the employment rate for women in recent years is partly a result of changes to the State Pension age for women, resulting in fewer women retiring between the ages of 60 and 65 years.

Estimates for May to July 2019 show 32.78 million people aged 16 years and over in employment, 369,000 more than for a year earlier. This annual increase has mainly been driven by more women in employment (up 284,000 on the year to reach 15.52 million). Male employment also showed an increase of 86,000 on the year to reach 17.26 million; this increase was driven by those who were self-employed. Looking at the estimates for May to July 2019 by type of employment: there were 27.67 million paid employees (84.4% of all people in employment), 235,000 more than a year earlier; there were 4.93 million self-employed people (15.0% of all people in employment), 125,000 more than a year earlier.

Since comparable records began in 1971, the economic inactivity rate for all people aged between 16 and 64 years has been generally falling (although it increased during recessions). This is because of a gradual fall in the economic inactivity rate for women. For people aged between 16 and 64 years, for May to July 2019: the estimated economic inactivity rate for everyone was 20.8%, down 0.5 percentage points on the year; the estimated economic inactivity rate for men was 16.4%, down 0.1 percentage points on the year; the estimated economic inactivity rate for women was 25.2%, down 0.8 percentage points on the year.

Estimates for May to July 2019 showed 8.59 million people aged from 16 to 64 years not in the labour force (economically inactive). This was 171,000 fewer than a year earlier and 487,000 fewer than five years earlier.

Total earnings growth, including bonuses, rose by an annual 4.0 percent in the three months to July, the highest rate since mid-2008. Excluding bonuses, pay growth eased to 3.8 percent, in line with market forecasts.




Monday September 09 2019
UK Trade Gap Widens Slightly in July
ONS | Luisa Carvalho | luisa.carvalho@tradingeconomics.com

The UK trade deficit rose slightly to GBP 0.22 billion in July 2019 from a revised GBP 0.13 billion shortfall in the previous month. Imports rose 2.7 percent while exports advanced at a slower 2.5 percent.

Imports of goods and services to the UK advanced 2.7 percent from a month earlier to GBP 55.30 billion in July 2019, the first gain in four months and the highest since January, following a downwardly revised 2.5 percent decrease in June. Purchases of goods went up 3.3 percent to GBP 41.19 billion, mainly driven by machinery and transport equipment (3.7 percent); miscellaneous manufactures (2.5 percent); chemicals (11 percent); fuels (3.6 percent); food & live animals (4.3 percent) and crude materials (12.3 percent). In contrast, lower acquisitions were recorded for material manufactures (-5.9 percent). At the same time, services imports rose 1.2 percent, the most in eight months, following a 0.3 percent gain in the prior month.

Among major trading partners, imports of goods from non EU-countries jumped 5.6 percent, mostly from China (3.5 percent), the US (14.1 percent), Norway (27.6 percent), Turkey (36.9 percent), India (55.7 percent), Japan (9.6 percent) and Russia (20.1 percent). Meantime, purchases from the EU grew 1.3 percent, namely Germany (7.9 percent), the Netherlands (2.4 percent), France (0.6 percent), Belgium (5.1 percent) and Spain (3.0 percent).

Exports from the UK increased 2.5 percent month-over-month to GBP 55.08 billion in July 2019, after a downwardly revised 1.9 percent rise in June. Shipments of goods grew 3.5 percent to GBP 31.05 billion, boosted by machinery & transport equipment (1.5 percent); chemicals (8.2 percent); miscellaneous manufactures (6.6 percent); fuels (3.8 percent). However, overseas sales fell for animal & vegetable oils & fats (-10.2 percent); crude materials (-0.2 percent) and beverages & tobacco (-3.9 percent). On the other hand, exports of services rose 1.3 percent, the most in eight months, after a 0.6 percent rise in June. 

Among major trading partners, goods exports to non-EU countries surged 5.2 percent, primarily to the US (13.8 percent), China (18.8 percent), Switzerland (8.7 percent), Hong Kong (1.7 percent) and Japan (11.9 percent). Exports to the EU rose 1.5 percent, in particular to Germany (5.8 percent), France (9.4 percent), Ireland (2.6 percent) and Spain (7.5 percent), but decreased to the Netherlands (-5.6 percent) and Belgium (-15.1 percent).



Wednesday August 14 2019
UK Inflation Rate Unexpectedly Rises Above BoE Target
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The consumer price inflation rate in the United Kingdom rose to 2.1 percent year-on-year in July 2019, beating market expectations of 1.9 percent and staying above the Bank of England's 2 percent target.

Main upward pressure came from recreation and culture (2.4 percent vs 1.8 percent in June), restaurants and hotels (3.1 percent vs 2.4 percent), clothing and footwear (0.4 percent vs -0.5 percent), furniture, household equipment and maintenance (1.1 percent vs 0.9 percent), and miscellaneous goods and services (1.7 percent vs 1.1 percent). On the other hand, prices rose at a softer pace for transport (1.5 percent vs 2.4 percent), housing, water, electricity, gas and other fuels (2.4 percent vs 2.8 percent), and food and non-alcoholic beverages (1.4 percent vs 1.6 percent).

The consumer prices index including owner occupiers’ housing costs (CPIH) rose 2 percent in July, faster than 1.9 percent in June.

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, advanced to 1.9 percent in July, the highest in six months.

On a monthly basis, consumer prices were flat for the second straight month, defying market consensus of a 0.1 percent fall. Increases in prices for recreation and culture (1.1 percent), restaurants and hotels (0.8 percent) and transport (0.4 percent) were offset by declines in costs for clothing and footwear (-2.9 percent), furniture, household equipment and maintenance (-1.7 percent), and miscellaneous goods and services (-0.1 percent).


Tuesday August 13 2019
UK Jobless Rate Rises Unexpectedly in Q2
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK unemployment rate edged up to 3.9 percent in the second quarter of 2019 from a 44-year low of 3.8 percent in the previous period, while markets had forecast the rate to remain unchanged. Unemployment rose by 31,000 to 1.329 million and employment jumped by 115,000 to a new all-time high of 32.811 million, comfortably above forecasts of a 65,000 increase. Meanwhile, total pay growth picked up to 3.7 percent, the fastest since June 2008.

Estimated unemployment rates for both men and women aged 16 years and over have been generally falling since late 2013. For April to June 2019, the estimated unemployment rate: for everyone was 3.9 percent, lower than a year earlier (4.0 percent), on the quarter the rate was 0.1 percentage points higher; for men was 4.1 percent, slightly higher than a year earlier (4.0 percent); for women was 3.6 percent, the joint-lowest since comparable records began in 1971.

For April to June 2019, an estimated 1.33 million people were unemployed, 33,000 fewer than a year earlier and 732,000 fewer than five years earlier. Looking in more detail at this fall of 732,000 unemployed people over the last five years: people unemployed for up to 6 months fell by 197,000 to 793,000; people out of work for between 6 and 12 months fell by 137,000 to 194,000; the largest fall was for people unemployed for over one year (down 398,000 to 342,000).

Estimated employment rates for men and women aged from 16 to 64 years have been generally increasing since early 2012. For April to June 2019, the estimated employment rate: for everyone was estimated at 76.1 percent, the joint-highest on record since comparable records began in 1971; for men was 80.1 percent; unchanged from a year earlier but down 0.2 percentage points on the quarter, the third consecutive quarterly decrease; for women was 72.1 percent, the highest since comparable records began in 1971. The increase in the employment rate for women in recent years is partly because of changes to the State Pension age for women, resulting in fewer women retiring between the ages of 60 and 65 years.

Estimates for April to June 2019 show 32.81 million people aged 16 years and over in employment, this is a record high and 425,000 more than for a year earlier. This annual increase of 425,000 was mainly because of more people working full-time (up 262,000 on the year to reach 24.11 million). Part-time working also showed an increase of 162,000 on the year to reach 8.70 million.

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 because of a gradual fall in the economic inactivity rate for women. For people aged from 16 to 64 years, for April to June 2019, the estimated economic inactivity rate: for all people was 20.7 percent, a joint-record low; for men was 16.3 percent; for women was 25.1 percent, a record low.

Estimates for April to June 2019 showed 8.56 million people aged from 16 to 64 years not in the labour force (economically inactive). This was: 176,000 fewer than a year earlier; 445,000 fewer than five years earlier.

Total earnings growth, including bonuses, rose by an annual 3.7 percent in the second quarter, the highest rate since June 2008. Excluding bonuses, pay growth picked up to 3.9 percent, beating market forecasts of 3.8 percent. Annual growth in both total pay (including bonuses) and regular pay (excluding bonuses) has accelerated in recent months. Two contributing factors were introduced in April that have a potential impact in this reporting period, these are: pay increases for some NHS staff, which will impact public sector pay growth; the introduction of the new National Living Wage rate (4.9 percentage points higher than the 2018 rate) and National Minimum Wage rates, which will impact the lowest-paid workers in sectors such as wholesaling, retailing, hotels and restaurants.


Friday August 09 2019
UK GDP Annual Growth Slows to Over 1-Year Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

Britain's gross domestic product expanded 1.2 percent year-on-year in the second quarter of 2019, slowing from 1.8 percent in the previous period and missing market consensus of 1.4 percent. It has not been weaker since the start of 2018.

On the expenditure side, household expenditure rose 1.8 percent in the second quarter (vs 1.9 percent in Q1); and government spending advanced 2.7 percent (vs 1.6 percent in Q1). Meanwhile, fixed investment growth slowed to 0.5 percent (vs 0.9 percent in Q1) amid a further decline in business investment (-1.6 percent vs -1.5 percent).

Exports rose 0.5 percent, after a 3 percent advance in Q1; while imports fell 0.8 percent, compared to a 14.3 percent jump in the previous period. As a result, the trade deficit narrowed to £4.373 billion from £6.286 billion in Q2 2018.

On the production side, the service industries expanded 1.6 percent (vs 2.1 percent in Q1) as output rose for: distribution, hotels and restaurants (2.6 percent vs 4.4 percent); transport storage and communications (4.6 percent vs 4.8 percent); business services and finance (0.7 percent vs 0.8 percent); and government and other services (0.9 percent vs 1.2 percent). Industrial production fell 0.5 percent (vs 0.3 percent in Q1), as output contracted for manufacturing (-0.9 percent vs 0.9 percent) and utilities (-0.3 percent vs -6.3 percent). By contrast, mining and quarrying output grew 1.9 percent (vs 4.9 percent in Q1) and water supply, sewerage, waste management and remediation activities rose 0.9 percent (vs 0.5 percent in Q1). Construction expansion slowed to 1.4 percent from 3.2 percent in Q1.