MNI: 5 Things We Learned From UK GDP Data

By Laurie Laird and Jamie Satchithanantham

     LONDON (MNI) - The following are the key points from the preliminary

estimate of Q4 GDP growth published Wednesday by the Office for National

Statistics.

     - Fourth quarter GDP grew by 0.5% exceeding expectations, powered by a

sharp increase in demand for business services. Business services alone

contributed just under 0.3pp to total growth. However, while at surface-level it

may seem impressive, the uneven growth across the economy and underlying slowing

in consumer-facing sectors may be worrying.

     - That meant the UK economy expanded by 1.8% over 2017, down from 1.9% in

2016 and the weakest pace since 2012. It was materially better than estimates

made in the immediate aftermath of the Brexit vote, however, when the BOE and

OBR forecast 2017 growth of 0.8% and 1.4% respectively.

     - Despite its robust showing in Q4, the influence of the UK service sector

is waning. The annual growth contribution of the industry has fallen from 2.7pp

in 2014 to 1.3pp in 2017, with the sector expanding by only 1.6% over 2017 - the

weakest annual rate since 2011. The ONS forecast no growth for the service

sector in December.

     - In fact, none of the major components of UK output are pencilled in to

register no growth in December. The ONS estimates that along with neutral

services output, IOP will fall 0.9% m/m in December, supplemented by a 0.1% fall

in construction output.

     - As predicted in our 5 Things To Look Out For preview, the Forties

pipeline shutdown weighed on industrial production but this was offset by the

bullish manufacturing sector. The latter has expanded for seven consecutive

months, the strongest run for two decades.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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