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British Chambers of Commerce provide their monthly economic data for November 2013
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04/11/2013 UK Economic Review PAGE 1 OF 4
UK Monthly Economic Review November 2013 (Based on October 2013 data releases)
Monthly headlines:
UK economy grew at fastest rate since 2010, with all main sectors seeing growth
UK jobs market strengthens, but real earnings continues to fall
The task of rebalancing the UK economy remains difficult and significant headwinds remain
GDP growth reaches three year high... The first official estimate of economic output (GDP)
put UK GDP growth at 0.8% in the third quarter of
2013, the fastest rise since Q2 2010 (see Chart 1).
This mirrors the Q3 2013 BCC Quarterly Economic
Survey (QES) which recorded a strengthening
economic recovery with most UK balances
improving. Although the level of economic output in
the UK is still 2.5% below its peak in Q1 2008, the
latest economic growth figures support our view
that the UK economic recovery is gathering
momentum.
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P G
row
th %
Chart: 1 Real GDP and Domestic Sales
Quarterly GDP growth
Domestic sales (Manufacturing)
Domestic sales (Services)
...with growth recorded across all sectors... Significantly, UK output increased in all four of the
main sector groupings - agriculture, production,
construction and services (see Chart 2). The service
sector, which accounts for over three-quarters of UK
economic output, was the key driver of growth in
Q3 with output rising by 0.7%. This mirrors the Q3
2013 QES with services firms seeing improving
balances. Construction, which accounts for around
6% of UK economic output, grew by 2.5%. Industrial
output rose by 0.5% in Q3, in line with the findings
from the latest QES.
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Agriculture Production Construction Services
Qu
arte
rly
chan
ge %
Chart 2: UK GDP Q3 2013, by Sector
BCC (%) IMF (%) Difference (%)
2013 1.3 1.4 -0.1
2014 2.2 1.9 +0.3
2015 2.5 2.3 +0.2
...as the IMF upgrades its UK GDP forecasts IMF (International Monetary Fund) upgraded their
forecast for UK GDP growth this year to 1.4%, from
their previous estimate of 0.9% published in July. The
IMF also raised its UK GDP forecast for 2014 to 1.9%,
from 1.5%. The BCC’s latest UK GDP forecast for 2013
of 1.3% is slightly below the IMF's latest forecast
(1.4%). However, the BCC expects slightly stronger
growth in 2014 and 2015 (see Table 1). Overall, our
view that the recent improvement in the UK
economy will continue is supported by the latest
upward revisions to the IMF's UK growth forecasts.
Sources: BCC, ONS
Source: ONS
Sources: BCC, IMF
Table 1: BCC and IMF GDP Forecasts
04/11/2013 UK Economic Review PAGE 2 OF 4
+
some
The UK jobs market continues to improve… The latest jobs data provides further evidence that
the UK labour market is strengthening. In the three
months to August 2013, the number of people in
work rose by 155,000 to a record high of 29.87
million. The number of people who are unemployed
fell by 18,000 over the same period. The Q3 2013
QES also points to a strengthening jobs market with a
marked improvement in the employment balances
(see Chart 3). However, the number of people who
were working part-time because they could not find
full-time work rose to 1.45 million, the highest figure
since records began in 1992.
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ance
%
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loym
ent,
mill
ion
s
Chart 3: UK Employment
Employment QES Employment Balance (manufacturing) QES Employment Balance (services)
5
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Un
emp
loym
ent
rate
%
Chart 4: Unemployment Rate, by UK Region and Nation
...and real earnings continue to decline CPI inflation was unchanged in September at 2.7%.
Although we still expect inflation to fall gradually
this year, the pace appears to be slower than we
had anticipated. Furthermore, with the Q3 2013 QES
revealing that intentions among firms to raise prices
is growing (see Chart 5) and large increases in utility
prices on the way, higher inflation remains a risk.
With inflation still well above the Bank of England's
2% target and earnings growth declining from 1.0%
to 0.8% in the three months to August 2013, the
squeeze on household budgets is increasing and
remains a risk to the UK economic recovery.
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nfl
atio
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Chart 5: UK Inflation
CPI inflation (LHS)
Expectations to increase prices (manufacturing)
Expectations to increase prices (services)
...but there are local disparities… Although the UK labour market picture remains
positive, there are notable disparities between the
UK's regions and nations. Seven out of the twelve
regions and nations in the UK currently have an
unemployment rate that is above the UK average of
7.7% (see Chart 4). In the three months to August
2013, the North East of England recorded the highest
unemployment rate (10.3%), followed by the West
Midlands (9.4%) and Yorkshire & the Humber (8.8%).
In contrast, the East of England (5.9%) has the lowest
unemployment rate in the UK, followed by the South
East (6.0%) and the South West (6.3%).
Sources: BCC, ONS
Sources: BCC, ONS
Sources: BCC, ONS
04/11/2013 UK Economic Review PAGE 3 OF 4
Bottom line: October’s data release provides further evidence that the upturn in the UK economy is gathering momentum. However, the UK is still lagging behind countries such as the US and Germany which have recovered the output lost during their own economic downturns. Therefore more must be done to secure the recovery, including better access to finance and export support.
For more information please contact: Suren Thiru, UK Economic Advisor. Email: [email protected]. Tel: 020 7654 5801
.
For more information please contact: Suren Thiru, UK Economic Advisor. Email: [email protected]
UK’s trade position remains weak... The UK's trade deficit improved slightly in August,
falling from £3.4 billion to £3.3 billion (see Chart 6). A
breakdown of the data showed that exports of goods to
countries outside the EU increased by £0.7 billion, more
than offsetting a £0.4 billion fall in exports to countries
within the EU. However, although some progress has
been made, the pace of rebalancing the UK economy
towards exports remains slow. In the three months to
August 2013, exports were 1.0% lower compared to the
three preceding months, while imports rose by 0.5% to
their highest level on record.
...but there is hope of a future improvement…
The Q3 2013 QES recorded an improvement in the
national export balances for manufacturing firms.
Although the export balances for the service sector fell
slightly, they remain at historically high levels. In both
sectors, the export balances are also higher than their
pre-recession levels in 2007 (see Chart 7). The strength
of the export balances in both manufacturing and
services provides further evidence of the potential of
British businesses to rebalance the UK economy
towards exports.
...even as the global economic outlook weakens
The International Monetary Fund (IMF) has cut its
forecast for global GDP growth. The IMF now expects
global growth of 2.9% this year, down from July's
estimate on 3.1% (see Chart 8). Despite an
improvement in growth in advanced economies such as
the UK (see Table 1), the IMF thinks that slower growth
in emerging economies such as China and India, could
hold back global growth. The continued debt crisis in
the US is also a key risk to global growth. The Eurozone,
the UK's major trading partner, is still expected to
contract in 2013, but at a slightly smaller rate.
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Chart 6: UK Trade Balance
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Chart 7: UK Export Sales
Export sales (services)
Export sales (manufacturing)
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Ch
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ge %
Chart 8: IMF GDP Forecasts for 2013
Jul-13 Oct-13
Source: BCC
Source: IMF
Source: ONS
04/11/2013 UK Economic Review PAGE 4 OF 4
Chart 9: UK economic summary chart Deteriorating No change Improving
*Colours indicate an improvement or deterioration of each indicator and refer to monthly changes unless stated. For example, an improvement in employment refers to an increase, while an improvement in unemployment refers to a fall. **Annual changes. ***Quarterly changes. ****Latest figures are estimates.
Sector Indictors (sources) Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13
Household Retail Sales (ONS)
Consumer Confidence (GfK NOP)
House Prices (Halifax)
New car sales (SMMT)**Mortgage approvals (Bank of England)
Business Business confidence (BCC)***
Business lending (Bank of England)
Service sector output (ONS)
Production output (ONS)Investment intentions (Bank of England)**
Labour market Employment (ONS)
Unemployment (ONS)
Claimant count (ONS)
Earnings (ONS)Economic Activity (ONS)
Financial FTSE100 (Bank of England)
Wholesale funding (Bank of England)
Retail funding (Bank of England)
Oil prices (Bank of England)Gold prices (Bank of England)
Government 10 year Government bonds (Bloomberg)
Public sector net borrowing (ONS)
Public sector net debt stock (ONS)
Tax receipts (ONS)Current Budget (ONS)
External UK trade balance (ONS)
Exchange rate (Bank of England)
Eurozone GDP (Eurostat)****
Export deliveries (BCC)***Export orders (BCC)***
