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
...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. ...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.
04/11/2013
Chart: 1 Real GDP and Domestic Sales
1.5
60 40
0.5
-1.5
0
Balance %
2013 Q3
2013 Q1
2012 Q3
2012 Q1
2011 Q3
2011 Q1
2010 Q3
2010 Q1
2009 Q3
-1.0
2009 Q1
-0.5
20 2008 Q3
0.0 2008 Q1
Quarterly GDP Growth %
1.0
-20 Quarterly GDP growth Domestic sales (Manufacturing) Domestic sales (Services)
-2.0 -2.5
-40
-3.0
-60 Sources: BCC, ONS
3.0
Chart 2: UK GDP Q3 2013, by Sector
2.5 Quarterly change %
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.
2.0 1.5 1.0 0.5 0.0 Agriculture
Production
Construction
Services Source: ONS
Table 1: BCC and IMF GDP Forecasts
BCC (%)
IMF (%)
Difference (%)
2013
1.3
1.4
-0.1
2014
2.2
1.9
+0.3
2015
2.5
2.3
+0.2
UK Economic Review
Sources: BCC, IMF
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