Tribble Agency
Tribble Agency


United Kingdom economy slows in third quarter

Manufacturing output declined 0.3% in the quarter and construction was down by 2.2%.

However, the dominant services sector strengthened slightly to 0.7 per cent, from 0.6 per cent quarter-on-quarter. Another factor was a decline in manufacturing, down 0.3%.

TUC general secretary Frances O'Grady said the latest figures highlighted how unbalanced Britain's economic recovery remained, and called on the Chancellor to offer greater support to the manufacturing sector. If the economy slows further, the government's policy may cause unemployment to rise once again'.

The British industrial production is now in recession and manufacturing has now fallen for three straight quarters, and down 0.9% during the first nine months of this year.

"The United Kingdom economy's momentum has begun to ease in light of increasing uncertainty and a weaker global environment, as we expected, but remains decent", Barclays economists said in a note to clients.

Earlier in October, the ONS reported that construction output fell by 1.3 per cent in August, while output levels were the lowest recorded in 2015 to date and the lowest in terms of volume since April 2014.

The Tuesday report comes just one day after a Reuters poll indicated that economists have pushed back their average forecast of when the Bank of England will start to raise interest rates.

"The market is already pricing in a very dovish profile for Bank of England policy, so you could argue a lot of bad news is in (sterling's) price already".

"While growth has slowed from the previous quarter, the economy overall is still expanding steadily".

There were increases in output in services, production and agriculture, but construction lagged, slumping by 2.2 per cent.

Hunter Kelly, restructuring partner at EY in Yorkshire and the North East, said the region's listed companies performed more in line with market expectations than the wider United Kingdom, as volatility in China, rumours of a USA interest rate move and commodity supply and demand imbalances created uncertainty.

"It's important to remember this is only the first estimate of GDP - based on less than half of the data which will ultimately be available".

The recovery is undoubtedly weighted towards consumption, and there's a serious question over whether that can continue to produce decent growth for years to come.

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