The U.K. economic growth decelerated at the beginning of the fourth quarter, showed the ONS data. The figures come on the heels of more up-to-date survey evidence which implies the economy is approaching stall speed and might even contact as 2019 approaches unless demand revives, noted Chris Williamson at IHS Markit.
The U.K. economy expanded 0.1 percent, consistent with expectations. While the rise was a rebound from the flat scenario recorded in the earlier two months, the more significant three-month growth decelerated to 0.4 percent.
The slowdown of the growth rate is consistent with the evidence from business surveys such as the IHS Markit PMI, the latest data that showed that the U.K. economy stalled in November. With the survey’s forward-looking gauges such as inflows of new work and business confidence also deteriorating, modest growth of only 0.1 percent is indicated for the fourth quarter, with an increased risk of the economy contracting as 2019 approaches unless demand recovers in the month ahead.
Decelerating growth of spending and investment is no surprise and is a rational response to deepening Brexit uncertainty, which has been exacerbated by a wider global economic slowdown, particularly in the euro area.
“The outlook for growth therefore very much depends on Brexit developments over the coming days, weeks and months, and the surrounding uncertainty makes forecasting extremely difficult”, said Chris Williamson.
Delving into details, industrial production dropped 0.6 percent in the month. The manufacturing output dropped around 0.9 percent. Meanwhile, construction industry output declined 0.2 percent, leaving the service sector as the only major part of the economy to grow at the beginning of the fourth quarter, though even here the 0.2 percent growth was just modest.
In the meantime, goods trade deficit widened in October, adding to the gloomier economic picture. Exports dropped 1.8 percent in October, falling 0.1 percent in the latest three months against the prior three months, while imports rose 3.8 percent, rising 2.2 percent in the latest three months.
At 17:00 GMT the FxWirePro's Hourly Strength Index of British Pound was slightly bearish at -59.1272, while the FxWirePro's Hourly Strength Index of US Dollar was bullish at 78.9759. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
