MNI DATA ANALYSIS: Q3 GDP Confirmed At +0.4% Q/Q>

-UK Q3 Current Account Deficit falls to Stg22.784bn from Stg25.821bn  

-UK Q3 Business Investment +0.5% vs +0.2% in previous estimate

-UK Q3 Net Trade exerts neutral effect vs -0.5pp previously

By Laurie Laird and Jamie Satchithanantham

     London (MNI) - UK growth accelerated modestly in the third quarter, 

confirming earlier estimates, while annual growth was revised higher, 

with business investment and trade both putting in a stronger 

performance than estimated a month ago. 

     Gross domestic product expanded by 0.4% in the third quarter, 

matching the MNI median forecast, unchanged from the outturn reported a 

month ago. 

     On an annual basis, output rose by 1.7%, exceeding the MNI median 

forecast, topping the 1.5% gain reported in the second estimate of GDP. 

     There were no revisions to growth over the first or second 

quarters, with the economy expanding at 0.3% over both periods. 

     But growth over 2016 was upgrade by 0.1 percentage point, rising by 

1.9% over 2015. 

     Meanwhile, the current account deficit narrowed in the third 

quarter, falling to Stg22.784 billion, compared to the MNI median 

forecast of Stg21.0 billion, from Stg25.821 in the second quarter. 

     That took the shortfall to 4.5% of GDP from 5.1% in the second 

quarter. 

     However household spending was a bit less robust than previously 

reported, rising by 0.5% in the third quarter, down from the 

previously-reported 0.6% gain, up from growth of 0.2% in the second 

three months of the year, accounting for 0.3 percentage points of total 

growth. 

     That took the savings ratio to 5.2%, down from 5.6% in the second 

quarter. However, on the non-financial account, which includes outlays 

for large capital transactions, net borrowing rose to Stg2.348 billion 

from Stg195 million in the second quarter. That's the fourth straight 

quarter of net household borrowing, the longest stretch since records 

began in 1987.  

     Business investment continued to hold up in the wake of the Brexit 

vote, rising by 0.5% in the third quarter, up from 0.2% gain reported 

last month, adding 0.1 percentage points to total growth. On an annual 

basis, business investment increased by 1.7% in the third quarter, 

exceeding the originally-reported 1.3% advance. 

     Over the third quarter of 2016, external trade provided less of a 

drag than reported a month ago. Exports rose by 0.8% over the second 

quarter, while imports rose by 0.9%. As a result, net trade exerted a 

neutral effect on total growth, a dramatic improvement on the 0.5 

percentage point drag included in the second estimate of GDP. 

     Government spending fell by 0.2%, down sharply from the 

originally-reported 0.3 percentage point gain, exerting a neutral 

influence on growth. The dramatic revision stems from a decrease in the 

volume of healthcare provision, combined with a statistical adjustment 

to balance the various measures of gross domestic product. 

     The dominant service sector growth expanded by at 0.4% in the third 

quarter, matching the gain estimated last month, contributing 0.3 

percentage points to total growth. 

     In the month of October, service output expanded by 0.2% over 

September and by 1.2% over the same month of 2016, according to a 

separate report released on Friday. 

     In the three months to October, the service sector rose by 0.3% 

over the previous three-month period, increasing by 1.3% over the same 

period of year earlier, the weakest annual growth since the three months 

to October of 2013. 

     The other output components of the economy were both stronger than 

initially reported in the third quarter. 

     Industrial output expanded by 1.3% in the third quarter, exceeding 

from the previously-reported 1.1% gain, adding 0.2 percentage points to 

total growth. The upgrade stems from revisions to value-added-tax 

receipts in previous periods and seasonal adjustment factors. 

     The construction sector contracted by 0.5%, better than the 0.9% 

slump reported a month ago, exerting a neutral effect on total output. 

-London bureau: 44 (0) 203 865 3812; email: ukeditorial@marketnews.com