The UK GDP data from the ONS
Commenting on the latest GDP data from the ONS, Chris Williamson said:
“The UK economy enjoyed further resilient growth in the closing quarter of 2017, though the upturn failed to prevent the country avoiding the worst annual performance for five years.
“Gross domestic product rose 0.5% in the three months to December, up from 0.4% in the third quarter, according to the Office for National Statistics. The upturn means the economy grew 1.8% in 2017 as a whole, down from 1.9% in 2016. That was the weakest expansion since 2012 and contrasted with faster growth in many of the world’s other economies, notably the Eurozone and the United States.
“Global GDP is likely to have grown 3.1% in 2017, up from 2.4% in 2016, with the rate of expansion in advanced economies accelerating from 1.6% to 2.3%.
“Compared to a year ago, UK GDP was up just 1.5% in the fourth quarter, which was the smallest annual increase since the start of 2013.
“The service sector grew by 0.6% in the three months to December, up from 0.4% in the third quarter. But industrial production growth slowed from 1.3% to 0.6% and the construction sector contracted by 1.0%, the latter representing a deepening of the building sector’s current recession.
“The fourth quarter rate of expansion was consistent with recent PMI survey evidence, which had signalled growth of 0.4-0.5% (a regression-based PMI model in fact pointed to 0.45%). The surveys suggest solid growth momentum was sustained throughout the quarter, with the December PMI registering similar growth to November.
“However, weaker growth of order books, decade high price pressures, subdued future optimism and a slowdown in hiring all underscored downside risks to the near-term outlook, according to the December surveys.
“Looking ahead, the twin concerns are the degree to which higher prices and falling real pay will continue to erode consumer spending power, and the extent to which Brexit uncertainty is holding back business investment (and potentially hiring too). The recent strengthening of the pound could also start to have an adverse effect on exports, which had been a main driver of a revived manufacturing sector in 2017.
“The economy is therefore likely to lose a little pace in 2018, with the consensus for growth running at 1.4%. In contrast, global economic growth is widely expected to accelerate slightly in 2018, suggesting the UK will once again under-perform.”