UK services doing fine while manufacturing suffers

The Office of National Statistics has released the first estimate of UK Q3 GDP growth (based on less than 50% of the total information required for the finalestimate). The figures show that growth in Q3 slowed to 0.5% from 0.7% q/q in Q2, below the consensus expectation of 0.6% q/q.

"This implies GDP in Q3 15 was 2.3% higher than in Q3 14 and 6.4% higher than the pre-crisis peak in Q1 08. Although growth slowed, it is still at trend and the economic upturn in the UK remains on track", says Danske Bank.
UK service sector (78.4% of GDP) was still the main contributor to growth. Services increased by 0.7% q/q and thus contributed by 0.59 percentage points to quarterly GDP growth in Q3. Construction (6.4% of GDP) declined by 2.2% which corresponds to a negative growth contribution of 0.14pp. Construction activity has fallen despite strong PMI and there is potential for a rebound in Q4. 

Total production (14.6% of GDP) increased slightly and thus contributed 0.04pp to quarterly GDP growth in Q3. Looking at the details, manufacturing production fell 0.3% q/q and has now fallen for three consecutive quarters. 

"The UK manufacturing sector is still suffering from the strong GBP and slowdown in the manufacturing sector globally. The fall in manufacturing production in Q3 was offset by higher activity in both mining and quarrying and water and waste management", added Danske Bank.