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UK Q3 GDP growth confirmed at 0.4%

Staff Writer |
The British economy advanced 0.4% on quarter in the three months to September of 2017, unrevised from the preliminary estimate and following a 0.3% expansion in the previous period.

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Household consumption rose at stronger pace, with car purchases recovering somewhat from a low Q2, while business investment growth softened.

From the expenditure side, the positive contribution to GDP came from gross capital formation (0.5%age points) and household final consumption expenditure (0.4%age points); while net trade had a negative contribution of 0.5%age points and other components were neutral.

Household expenditure advanced by 0.6%, after rising by only 0.2% in the previous period, boosted by a modest recovery to expenditure on transport, including motor cars.

Government spending expanded by 0.3% (0.1% in Q2 2017), with healthcare and education being the largest contributor to growth. Gross fixed capital formation grew by 0.2% (0.6% in Q2), as business investment growth slowed (0.2% from 0.5% in Q2).

Meanwhile, the sectors contributing the most to GFCF growth were both dwellings and intellectual property products.

Imports of goods increased by 1.9% (0.4% in Q2), driven by non-monetary gold within the unspecified goods component, fuels, and machinery and transport equipment; while those of services fell by 1.5% (-0.4% in Q2), due to other business services.

Exports of goods decreased by 1.8% (4% in Q2), driven by fuels, specifically oils and chemicals; while exports of services went up by 0.6% (-1.1% in Q2), boosted by other business services. As a result, the trade deficit widened by £2.536 billion to £11.737 billion, the largest widening since Q3 2016.

From the production side, the services aggregate was the main driver to the growth in GDP, contributing 0.3%age points, followed by total production (0.2%age points).

These positive contributions were offset by a negative 0.1%age point contribution from the construction industry while agriculture provided no contribution to growth.

The services industries increased by 0.4%, the same pace as in the previous period. The largest contribution came from business services and finance (0.6% from 0.1% in Q2) with professional, scientific, administration and support providing most of this increase.

Also, upward contribution came from both distribution, hotels & restaurants (0.3% from 0.9%); and government and other services (0.2% from 0.3%); while transport, storage and communications showed no growth (1.2% in Q2).

Industrial output increased by 1.1% (-0.3% in Q2), boosted by all four main categories: Manufacturing (1.1% from -0.3%); mining and quarrying (2.1% from 0.6%); electricity, gas, steam and air conditioning supply (1.1% from -0.3%); and water supply and sewerage (0.7% from -1%).

Construction output shrank by 0.9%, following a 0.5% contraction the previous period.

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