MNI DATA ANALYSIS: UK Growth Accelerates; Bus Inv Slumps>

-UK Q3 GDP +0.6% q/q; +1.5% y/y vs +0.4% q/q, +1.2% y/y in Q2 

-UK Q3 Services +0.4% q/q vs +0.6% Q2 

-UK Q3 Business Investment -1.2% q/q vs -0.7% Q2 

-UK Q3 Net Trade Adds 0.8pp to GDP, highest contribution since Q4 2016 

-UK Q3 Household Spending +0.5% vs +0.4% Q2 

     By Laurie Laird, Jamie Satchithanantham and Jai Lakhani 

     London (MNI) - The UK economic growth accelerated in the third 

quarter, with the pick up in activity concentrated in the month of July, 

even as business investment slumped for the third straight quarter, the 

longest stretch since 2009. 

     Gross domestic product rose by 0.6% in the third three months of 

2018, according to preliminary data released on Friday, in line with the 

median MNI forecast, up from the 0.4% pace recorded over the second 

quarter of 2018. 

     That's the fastest pace of growth since the fourth quarter of 2016 

and matches the 0.6% forecast by Bank of England staff as reported in 

the November Inflation Report. 

     Over the month of September, GDP recorded no growth over August, 

below the MNI median forecast of 0.1%. A 0.7% monthly spurt during an 

unusually-balmy July accounted for the bulk of third quarter growth. 

     On an annual basis, GDP rose by 1.5% in the third quarter, in line 

with the MNI median of 1.5%, up from the 1.2% pace of the first quarter. 

     The robust performance over the third quarter came despite an 

extended downturn in business investment, which declined by 1.2%, 

lopping 0.1 percentage points from total growth.  That's the third 

straight decline in business investment, after a drop of 0.7% in the 

second quarter and a fall of 0.5% in the first, the longest stretch of 

weakness since the three quarters ending in third quarter of 2009. 

     The Office for National Statistics does not provide industry-level 

detail on business investment with the early estimate of GDP, and warned 

that the data are subject to revision. 

     But household spending kept the broader economy on track, rising by 

0.5% in the third quarter, after a 0.4% gain in the previous three 

months, adding 0.3 percentage points to growth. 

     Net trade provided a large boost to growth, adding 0.8 percentage 

points to GDP, the biggest filip since the fourth quarter of 2016. 

Exports jumped by 2.7% over the previous three months, while imports 

were flat. 

     Over the month of September, the deficit narrowed dramatically to 

Stg27 million from Stg2.101 billion in August, courtesy of 2.5% plunge 

in imports, particularly non-monetary gold. 

     The shortfall in goods declined to Stg9.731 billion from Stg11.724 

billion the previous month, with imports falling by 3.5%. The sharp fall 

in imports suggests no evidence of stockpiling of food or medicines 

ahead of Brexit, according to a National Statistics official.  

     The output components of the economy all recorded gains in the 

third quarter, for the first time since the same period of last year. 

     However the dominant service sector slowed markedly from late 

summer, expanding by 0.4%, below the median MNI forecast of 0.5% and 

down from a 0.6% increase in the previous period, accounting for 0.3 

percentage points of total growth. Services comprise 79.6% of total 

output. 

     Output of services declined by 0.1% between August and September, 

falling short of the MNI median forecast of 0.1% gain, after recording 

no growth in August. A drop in motor trade accounted for much of the 

September weakness, lopping 0.14 percentage points from total services 

output, after regulatory changes dampened car sales. 

     Industrial production rose by 0.8% in the third quarter, reversing 

the upwardly-revised 0.8% slump in the second three months of the year. 

Production, which accounts for 13.8% of total output, added 0.1 

percentage point to total growth. 

     Over the month of September, production recorded no change, 

exceeding the MNI median forecast of a 0.1% decrease, following the same 

outturn in August. On an annual basis, output was also unchanged, 

falling short of the MNI median forecast of a 1.3% gain. 

     Manufacturing output climbed back into positive territory, after 

two straight quarters of decline, rising 0.6% between July and 

September, after declining by 0.7% in the second three months of the 

year. 

     Factory output rose by 0.2 between August and September, beating 

the MNI median forecast of a 0.1% gain, after a 0.1% slump the previous 

month. Over the year to September, manufacturing rose by 0.5%, above the 

MNI median forecast of 0.3%. 

     Construction jumped by a quarterly rate of 2.1%, adding 0.1 

percentage point to growth, after a 0.8% gain in the second quarter.  

Construction accounts for 6.0% of total output. 

     Over the month of September, construction rose by 1.7% over August, 

or by 3.1% over the same period a year earlier, far exceeding the MNI 

median forecast of a 0.1% monthly rise and a 1.3% annual gain. That's 

the biggest annual gain since December of 2017. 

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

[TOPICS: M$B$$$,MABDS$]