• GDP DATA BETTER THAN EXPECTED

Figure 1 - UK GDP growth (3 months on previous 3 months, per cent)

Main points

• The UK economy is on course to grow by 0.5 per cent in the third quarter of 2019 and by 0.3 per cent in the fourth quarter (figure 1).  This would be consistent with GDP growth of 1.3 per cent in 2019 as a whole, down slightly from 1.4 per cent in 2018 and 1.9 per cent in 2017.  
• According to new ONS statistics published this morning, the UK economy grew by 0.3 per cent in the three months to August, driven by growth in the services sector.  This was a little stronger than we forecast last month, partly reflecting upward revisions to the June and July data.  GDP fell by 0.1 per cent in the month of August, in line with our previous forecast.
• Recent surveys suggest that private sector output fell in September, with manufacturing being particularly weak.  Nevertheless, even after pencilling in flat output in September, we forecast GDP growth of 0.5 per cent in the quarter as a whole as the economy recovers from the particularly weak second quarter.

“Despite better than expected GDP data, the underlying pace of growth in the United Kingdom is slow.  The strongest source of private sector demand is household consumption, driven by real wage growth, but this is not sustainable without a pick-up in productivity growth, and this seems unlikely in the near term.”

Dr Garry Young
Director of Macroeconomic Modelling and Forecasting

• Read the full forecast here