- REUTERS/Eddie Keogh
The British economy grew by 0.5% in the third quarter of the year, a weaker pace than was forecast.
Analysts were expecting a 0.6% increase from Q2, down from 0.7% previous. Some had even revised their estimates down as various economic data points came out in October – the UK’s services PMI, for example, showed its slowest expansion in two and a half years in September.
On the other hand, retail sales popped in September, surging upwards by 6.5% year-on-year, a 1.9% increase from August alone.
Some analysts, like Samuel Tombs at Pantheon Macroeconomics, have expressed scepticism about the UK economy’s ability to keep growing at its current pace.
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.
The breakdown of growth shows that the dominant services industry is still powering UK growth – it rose by 0.7% in Q3 now over 12% larger than it was in the first quarter of 2008, as the debilitating effect of the financial crisis set in.
Manufacturing is still below its 2008 output levels, and dropped 0.3% in Q3. Production overall (including manufacturing, mining and energy supply) is nearly 10% below where it was seven years ago.
Construction also took a worrying dip, falling by 2.2%.