In a dramatic week for UK politics the headlines were dominated by the vote of confidence in Theresa May’s leadership and her Brexit deal. But as the infighting continued in Westminster, data released this week underscored how the British economy is struggling amid the uncertainties that Brexit is creating.
The Office for National Statistics said the pace of economic growth slowed in October after a fall in car sales and factory output. GDP grew by 0.4% in the three months to October, down from 0.6% in the three months to September.
A spokesman for the ONS said that manufacturing saw no growth at all in the period, mainly due to a decline in the pharmaceutical industry. Economists believe that growth will remain subdued until Brexit is clarified, as companies are reluctant to invest and consumers are putting off big purchases.
A report from Springboard and the British Retail Consortium showed how the high street is continuing to struggle. It said that footfall in shops was down 3.2% last month - the twelfth consecutive monthly decline. The drop was blamed on consumers making more purchases online, specifically over the Black Friday shopping period.
Helen Dickinson, chief executive of the BRC, said: "With one-in-every-three-pounds of non-food purchases made online last month, Black Friday accelerated the movement from in store to online in the lead up to Christmas."
In some good news the UK unemployment rate remained unchanged at 4.1% in October, while wage inflation picked up to its fastest pace in 10 years, according to the ONS.
Average earnings, excluding bonuses, rose by an annual rate of 3.3% in the three months to October, up from 3.2% for the quarter before. It means wages are rising faster than inflation, which was up by an annualised rate of 2.4% in October. The number of people in work also rose to 32.5million, the highest figure since records began in 1971.
A measure of the UK property market reached its weakest level in more than six years in November. The Royal Institution of Chartered Surveyors’ house price balance slumped to -11 last month from -10 in October - its lowest reading since September 2012. The number of people looking for a new home also fell in November, with the net balance down to -21 from -15 in October. The fall was blamed on Brexit-uncertainty.
Looking ahead, the data was equally downbeat, with sales expectations for the coming three months slumping to -23 in November, down from -6 the month before.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "We expect house prices to struggle…and looking ahead, house prices are set to rise less quickly than households’ incomes, as the MPC likely will pick up the pace of interest rate hikes next year." China released economic data on Thursday that fell mostly below analysts’ expectations. Fixed asset investment grew by 5.9% while economists were expecting 5.8%; industrial output came in at 5.4% against expectations 5.9%. Finally, retail sales rose by 8.1% compared to expectations of 8.8%. The underperformance relative to analysts’ forecasts spooked Asian markets which saw broad falls across the region.
Main source of information: Company Report and Accounts, Bloomberg
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