Tuesday January 16 2018
UK Inflation Rate Eases from 6-Year High in December
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK consumer price inflation eased to 3 percent in December 2017 from a near six-year high of 3.1 percent in the previous month, as widely expected.

Year-on-year, prices rose at a slower pace for: transport (3.8 percent from 4.5 percent in November), in particular spare parts and accessories (2.7 percent from 3.2 percent) and purchase of second-hand cars (0.5 percent from 0.8 percent); recreation and culture (2.7 percent from 3.1 percent); restaurants and hotels (3.1 percent from 3.2 percent); housing, water, electricity, gas and other fuels (2.3 percent from 2.4 percent); and food and non-alcoholic beverages (3.9 percent from 4.1 percent). Meanwhile, inflation picked up for miscellaneous goods and services (0.8 percent from 0.6 percent in November); clothing and footwear (3.1 percent from 3 percent); furniture, household equipment and maintenance (3.2 percent from 2.8 percent); and alcoholic beverages and tobacco (5.6 percent from 4.5 percent).

The consumer prices index including owner occupiers’ housing costs (CPIH) rose by 2.7 percent in December, compared to 2.8 percent in November.

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, fell to 2.5 percent in December from a six-year high of 2.7 percent in November.

On a monthly basis, consumer prices rose 0.4 percent after increasing 0.3 percent in November, in line with market forecasts. Prices rose sharply for transport (2.2 percent), furniture, household equipment and maintenance (1.3 percent) and food and non-alcoholic beverages (0.6 percent).




Wednesday January 10 2018
UK November Trade Deficit Largest in 5 Months
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The UK’s deficit on trade in goods and services widened by GBP 0.5 billion to GBP 2.804 billion in November 2017 from an upwardly revised GBP 2.270 billion in the previous month. It was the largest trade deficit since June.

Imports of goods and services to the UK rose 1.6 percent to an all-time high of GBP 55.45 billion from GBP 54.59 billion in the previous month, boosted by a 2.1 percent increase in purchases of goods, mainly fuels (15.9 percent), and a 0.2 percent gain in imports of services. Among trading partners, imports of goods from non-EU countries jumped 6.7 percent, mainly from Canada (74.5 percent), Switzerland (51.2 percent), Norway (44.1 percent), the US (16.1 percent) and China (4.9 percent). On the other hand, purchases from the EU dropped 1.7 percent, as imports decreased the most from Spain (-19.8 percent) and Germany (-10.5 percent).

Exports from the UK increased at a slower 0.6 percent to GBP 52.65 billion in November from GBP 52.32 billion in October, due to higher sales of goods (1 percent) and services (0.2 percent). Among major trading partners, exports of goods to the EU grew 2.6 percent, as sales increased mainly to the Netherlands (21.1 percent), Belgium & Luxembourg (13 percent) and Ireland (7.6 percent) while exports fell to France (-15.4 percent). By contrast, exports of goods to non-EU countries declined 0.6 percent, namely to Canada (-11.3 percent), Japan (-8.7 percent), the US (-6 percent) and South Korea (-25.3 percent), while exports rose to Hong Kong (38.8 percent) and China (28.4 percent).

In the three months to November 2017, the trade deficit narrowed by GBP 2.1 billion to GBP 6.2 billion, largely due to an increase in exports of goods, mainly unspecified goods (particularly non-monetary gold), and machinery and transport equipment. 




Friday December 22 2017
UK Q3 GDP Annual Growth Revised Up to 1.7%
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy grew 1.7 percent year-on-year in the third quarter of 2017, above the preliminary estimate of 1.5 percent and following an upwardly revised 1.9 percent expansion in the previous period. Still, it was the weakest annual growth rate since the first quarter of 2013, as household consumption and fixed investment rose at a softer pace.

On the expenditure side, household expenditure went up 1 percent, easing from a 1.4 percent increase in Q2 2017; and gross fixed capital formation went up 2.4 percent , slower than 3.3 percent, as business investment growth eased to 1.7 percent (2.5 percent in Q2). Also, government spending grew by 0.3 percent, after a 0.6 percent gain in the previous period.

Exports jumped 8.3 percent, following a 5.5 percent gain in Q2; while imports rose at a slower 1.3 percent, after increasing by 3.8 percent the previous period. As a result, the trade deficit narrowed to £7.8 billion from £16.8 billion in Q3 2016. 

On the production side, the service industries expanded 1.4 percent (1.8 percent in Q2) as output rose for: Distribution, hotels and restaurants (2 percent from 2.7 percent Q2); transport storage and communications (1.8 percent from 4.6 percent); business services and finance (1.6 percent from 1.5 percent); and government and other services (0.4 percent, the same as in Q2). Industrial production grew 2.4 percent (0.6 percent in Q2), as output rose for: manufacturing (3.3 percent from 1.4 percent); electricity, gas, steam and air conditioning supply (0.6 percent from -5 percent); and water supply, sewerage, waste management and remediation activities (2 percent from 2.8 percent). Meanwhile, mining and quarrying output contracted (-2.1 percent from 0.2 percent). Construction expansion slowed to 4.8 percent from 6.6 percent in Q2.




Friday December 22 2017
UK Q3 GDP Growth Confirmed at 0.4%
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy advanced 0.4 percent on quarter in the three months to September of 2017, unrevised from the second estimate and following a 0.3 percent expansion in the previous period. Household consumption rose at stronger pace while fixed investment growth softened.

From the expenditure side, the positive contribution to GDP came from household final consumption expenditure (0.3 percentage points), gross capital formation (0.1 percentage points) and business investment (0.1 percentage points); while net trade had a negative contribution of 0.1 percentage points and other components were neutral.

Household expenditure advanced by 0.5 percent, after rising by only 0.2 percent in the previous period. Gross fixed capital formation grew by 0.3 percent (1 percent in Q2 2017), as business investment growth was unchanged at 0.5 percent, while government spending fell by 0.2 percent (0.4 percent in Q2), mainly due to healthcare.

Imports of goods increased by 1.7 percent (0.5 percent in Q2), driven by increases in fuels, and machinery and transport equipment; while those of services fell by 0.8 percent (0.7 percent in Q2), due to other business services and sea transport. Exports of goods increased by 0.8 percent (3.1 percent in Q2), driven by machinery and transport equipment; while exports of services went up by 1.8 percent (0.9 percent in Q2), due primarily to strength in other services, which includes research and development. As a result, the trade deficit widened by £0.16 billion to £7.833 billion.

From the production side, the services aggregate was the main driver to the growth in GDP, contributing 0.3 percentage points, followed by total production (0.2 percentage points). These positive contributions were offset by a negative 0.1 percentage point contribution from the construction industry while agriculture provided no contribution to growth.

The services industries increased by 0.4 percent, the same pace as in the previous period. The largest contribution came from business services and finance (0.7 percent from 0.1 percent in Q2), followed by distribution, hotels & restaurants (0.5 percent, the same as in Q2). Meanwhile, output showed no growth for both government and other services (from 0.3 percent in Q2) and transport, storage and communications (1.4 percent in Q2). Industrial output increased by 1.3 percent (-0.1 percent in Q2), boosted by: manufacturing (1.3 percent from -0.1 percent); mining and quarrying (2.9 percent from 1.1 percent); and electricity, gas, steam and air conditioning supply (1.4 percent from -0.2 percent). Water supply and sewerage output fell 0.5 percent after a 1 percent drop in Q2. Construction output shrank by 0.5 percent, following a 0.3 percent contraction the previous period.




Thursday December 14 2017
BoE Holds Bank Rate at 0.5% as Expected
Bank of England | Joana Ferreira | joana.ferreira@tradingeconomics.com

The Bank of England voted unanimously to keep the Bank Rate at 0.5 percent on December 14th as widely expected, following a 25bps hike in the previous meeting. The Committee also voted unanimously to keep the stock of UK government bond purchases at £435 billion and the stock of sterling non-financial investment-grade corporate bond purchases at £10 billion.

Excerpts from the BoE Monetary Policy Summary:

The recent news in the macroeconomic data has been mixed and relatively limited. Global growth has remained strong. Domestically, some activity indicators suggest GDP growth in Q4 might be slightly softer than in Q3. The measures announced in the Autumn Budget will lessen the drag on aggregate demand stemming from fiscal consolidation, relative to previous plans. The labour market remains tight, and surveys suggest this will continue. Although it is too early to arrive at a comprehensive view of the effect of November’s rise in Bank Rate on the economy, the impact on interest rates faced by households and firms has been consistent with previous experience.  

CPI inflation was 3.1% in November. It remains the case that inflation has been pushed above the target by the boost to import prices that resulted from the past depreciation of sterling. The MPC judges that inflation is likely to be close to its peak, and will decline towards the 2% target in the medium term. In line with the procedure set out in the MPC’s remit, the Governor will be writing an open letter to the Chancellor of the Exchequer, accounting for the overshoot relative to the target and explaining the MPC’s policy strategy to return inflation sustainably to the target. This letter will be published alongside the minutes of the February 2018 MPC meeting and the accompanying Inflation Report.

Developments regarding the United Kingdom’s withdrawal from the European Union – and in particular the reaction of households, businesses and asset prices to them – remain the most significant influence on, and source of uncertainty about, the economic outlook. The Committee noted the progress in the Article 50 negotiations between the United Kingdom and the European Union. In such exceptional circumstances, the MPC’s remit specifies that 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 over the past year or so has reduced the degree to which it is appropriate for the MPC to accommodate an extended period of inflation above the target. Consequently, at its previous meeting, the MPC judged it appropriate to tighten modestly the stance of monetary policy in order to return inflation sustainably to the target, while continuing to provide significant support to jobs and activity. At this meeting, the Committee voted unanimously to maintain the current monetary stance. The Committee remains of the view that, were the economy to follow the path expected in the November Inflation Report, further modest increases in Bank Rate would be warranted over the next few years, in order to return inflation sustainably to the target. Any future increases in Bank Rate are expected to be at a gradual pace and to a limited extent. The Committee will monitor closely the incoming evidence on the evolving economic outlook, including the impact of last month’s increase in Bank Rate, and stands ready to respond to developments as they unfold to ensure a sustainable return of inflation to the 2% target.




Wednesday December 13 2017
UK Unemployment Rate Holds at Four-Decade Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

UK unemployment rate stood at a 42-year low of 4.3 percent in the three months to October of 2017, unchanged from the May to July period and slightly above market expectations of 4.2 percent. The number of unemployed continued to fall and that of people in work declined for the second month in a row.

There were 1.43 million unemployed people, 26,000 fewer than for May to July 2017 and 182,000 fewer than for a year earlier. The unemployment rate was 4.3 percent, down from 4.8 percent for a year earlier and the joint lowest since 1975.

There were 32.08 million people in work, 56,000 fewer than for May to July 2017 but 325,000 more than for a year earlier. The employment rate was 75.1 percent, lower than for May to July 2017 (75.3 percent) but higher than for a year earlier (74.4 percent).

There were 8.86 million people aged from 16 to 64 who were economically inactive, 115,000 more than for May to July 2017 but 56,000 fewer than for a year earlier. The inactivity rate was 21.5 percent, higher than for May to July 2017 (21.2 percent) but lower than for a year earlier (21.7 percent).

Latest estimates show that average weekly earnings for employees in the UK in nominal terms (that is, not adjusted for price inflation) increased by 2.5 percent including bonuses, and by 2.3 percent excluding bonuses, compared with a year earlier. In real terms (that is, adjusted for price inflation), average weekly earnings fell by 0.2 percent including bonuses, and by 0.4 percent excluding bonuses, compared with a year earlier.




Tuesday December 12 2017
UK November Inflation Rate Highest Since Early 2012
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

Consumer prices in the United Kingdom rose by 3.1 percent in the year to November 2017, following a 3 percent gain in the previous month and beating market expectations of 3 percent. It was the highest inflation rate since March 2012, mainly due to rising prices of transport, leisure activities, restaurants and hotels, housing and food.

Year-on-year, prices rose at a faster pace for: transport (4.5 percent from 4 percent in October), in particular fuels and lubricants (3.5 percent from 3.4 percent) and purchase of new cars (3.8 percent from 3.2 percent); recreation and culture (3.1 percent from 2.8 percent); restaurants and hotels (3.2 percent from 3.1 percent); housing, water, electricity, gas and other fuels (2.4 percent from 2.3 percent); food and non-alcoholic beverages (4.1 percent from 4 percent); and alcoholic beverages and tobacco (4.5 percent from 4.3 percent). Meanwhile, inflation slowed for clothing and footwear (3 percent from 3.2 percent in October); furniture, household equipment and maintenance (2.8 percent from 3.1 percent); and miscellaneous goods and services (0.6 percent from 0.9 percent).

The consumer prices index including owner occupiers’ housing costs (CPIH) rose by 2.8 percent in November, the same as in October.

The annual core inflation rate, which excludes prices of energy, food, alcohol and tobacco, stood at 2.7 percent in November, unchanged from the previous month and in line with market consensus. The rate remained at the highest level since December 2011.

On a monthly basis, consumer prices rose 0.3 percent after increasing 0.1 percent in October and above market forecast of 0.2 percent. Prices rose sharply for clothing and footwear (1.2 percent), recreation and culture (0.7 percent) and food and non-alcoholic beverages (0.5 percent).


Friday December 08 2017
UK Trade Gap Well Below Expectations in October
ONS | Joana Taborda | joana.taborda@tradingeconomics.com

The UK’s deficit on trade in goods and services increased to GBP 1.41 billion in October of 2017 from a downwardly revised GBP 1.14 billion gap in September but way below market expectations of a GBP 3 billion gap. Both exports and imports reached record values although purchases rose at a faster pace, mainly due to unspecified goods (including non-monetary gold) from non-EU countries.

Total exports went up 1.1 percent from the previous month to a record high of GBP 53.669 billion. Shipments of goods rose 1.8 percent, mainly due to semi manufactured goods (1.7 percent); finished manufactured (1.1 percent) and unspecified goods (19.9 percent). Exports of services increased 0.3 percent to GBP 23.46 billion. On the other hand, oil sales fell 1.6 percent. Shipments rose to France (1.6 percent); Italy (6 percent); Spain (2.6 percent) and Sweden (2.6 percent) but fell to Germany (-6.8 percent); Netherlands (-3.1 percent); Belgium and Luxembourg (-6.9 percent); Ireland (-0.2 percent) and China (-1.6 percent). 

Total imports rose 1.6 percent month-over-month to a record high of GBP 55.07 billion: purchases of goods advanced 2.1 percent to GBP 40.99 billion and those of services edged up 0.1 percent to GBP 14.08 billion. Imports went up for mainly for food, beverages and tobacco (1.9 percent); finished manufactured (5 percent) unspecified good (17 percent). In contrast, imports of oil went down 2.7 percent. Main rises were seen in purchases from Germany (4.4 percent); Netherlands (3.9 percent); France (0.8 percent); Belgium and Luxembourg (4 percent) and Italy (2.8 percent) while those from China went down 3.5 percent.  

Considering the three months to October, the total trade deficit narrowed by GBP 2.7 billion to GBP 5 billion. Total eports went up 2.7 percent, mainly to goods, which increased 3.8 percent. Unspecified goods (particularly non-monetary gold) was the main contributor to the increase. Total imports rose at a slower 0.8 percent. 


Thursday November 23 2017
UK Q3 GDP Annual Growth Confirmed at 4-1/2-Year Low
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy grew 1.5 percent year-on-year in the third quarter of 2017, unrevised from the preliminary estimate and the same pace as in the previous period. It was the weakest annual growth rate since the first quarter of 2013, as fixed investment rose at a softer pace.

On the expenditure side, household expenditure rose 1.6 percent, the same pace as in Q2; and gross fixed capital formation went up at a slower 1.8 percent (2.4 percent in Q2) as business investment growth slowed to 1.3 percent (2.5 percent in Q2). Meanwhile, government spending grew by 0.8 percent, faster than a 0.5 percent gain in the previous period.

Exports jumped 6.2 percent, following a 4.9 percent gain in Q2; while imports rose at a slower 1.5 percent, after increasing by 3.4 percent the previous period. As a result, the trade deficit narrowed to £11.7 billion from £17.4 billion in Q3 2016. 

On the production side, the service industries expanded 1.4 percent (1.8 percent in Q2) as output rose for: Distribution, hotels and restaurants (2.2 percent from 3.1 percent Q2); transport storage and communications (1 percent from 3.4 percent); business services and finance (1.6 percent from 1.3 percent); and government and other services (0.9 percent from 1.1 percent). Industrial production grew 1.8 percent (0.2 percent in Q2), as output rose for: Manufacturing (2.7 percent from 0.9 percent) and water supply, sewerage, waste management and remediation activities (2.6 percent from 2.4 percent). Meanwhile, electricity, gas, steam and air conditioning supply showed no growth (-4.8 percent in Q2); and mining and quarrying continued to contract (-3.6 percent from -0.9 percent). Construction expansion slowed to 2.6 percent from 4.1 percent in Q2.


Thursday November 23 2017
UK Q3 GDP Growth Confirmed at 0.4%
ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com

The British economy advanced 0.4 percent on quarter in the three months to September of 2017, unrevised from the preliminary estimate and following a 0.3 percent expansion in the previous period. Household consumption rose at stronger pace, with car purchases recovering somewhat from a low Q2, while business investment growth softened.

From the expenditure side, the positive contribution to GDP came from gross capital formation (0.5 percentage points) and household final consumption expenditure (0.4 percentage points); while net trade had a negative contribution of 0.5 percentage points and other components were neutral.

Household expenditure advanced by 0.6 percent, after rising by only 0.2 percent in the previous period, boosted by a modest recovery to expenditure on transport, including motor cars. Government spending expanded by 0.3 percent (0.1 percent in Q2 2017), with healthcare and education being the largest contributor to growth. Gross fixed capital formation grew by 0.2 percent (0.6 percent in Q2), as business investment growth slowed (0.2 percent from 0.5 percent in Q2). Meanwhile, the sectors contributing the most to GFCF growth were both dwellings and intellectual property products.

Imports of goods increased by 1.9 percent (0.4 percent in Q2), driven by non-monetary gold within the unspecified goods component, fuels, and machinery and transport equipment; while those of services fell by 1.5 percent (-0.4 percent in Q2), due to other business services. Exports of goods decreased by 1.8 percent (4 percent in Q2), driven by fuels, specifically oils and chemicals; while exports of services went up by 0.6 percent (-1.1 percent in Q2), boosted by other business services. As a result, the trade deficit widened by £2.536 billion to £11.737 billion, the largest widening since Q3 2016.

From the production side, the services aggregate was the main driver to the growth in GDP, contributing 0.3 percentage points, followed by total production (0.2 percentage points). These positive contributions were offset by a negative 0.1 percentage point contribution from the construction industry while agriculture provided no contribution to growth.

The services industries increased by 0.4 percent, the same pace as in the previous period. The largest contribution came from business services and finance (0.6 percent from 0.1 percent in Q2) with professional, scientific, administration and support providing most of this increase. Also, upward contribution came from both distribution, hotels & restaurants (0.3 percent from 0.9 percent); and government and other services (0.2 percent from 0.3 percent); while transport, storage and communications showed no growth (1.2 percent in Q2). Industrial output increased by 1.1 percent (-0.3 percent in Q2), boosted by all four main categories: Manufacturing (1.1 percent from -0.3 percent); mining and quarrying (2.1 percent from 0.6 percent); electricity, gas, steam and air conditioning supply (1.1 percent from -0.3 percent); and water supply and sewerage (0.7 percent from -1 percent). Construction output shrank by 0.9 percent, following a 0.5 percent contraction the previous period.