UK Analysis: Q3 Growth Accelerates Modestly; Services Steady>

-UK Q3 GDP +0.4% q/q; +1.5% y/y vs +0.3% q/q, +1.5% y/y in Q2

-UK August Index of Services +0.2% m/m, +0.4% 3m/3m 

     By Laurie Laird and Jamie Satchithanantham 

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

courtesy of solid service sector growth and a rebound in auto 

production.  

     Gross domestic product rose by 0.4% in the third quarter of 2017, 

according to preliminary data released on Wednesday, above the median 

MNI forecast of a 0.3% gain, and up from the 0.3% pace recorded over the 

second three months of the year.  

     On an annual basis, GDP rose by 1.5%, above the MNI median of 1.4%, 

matching from the 1.5% pace of the second quarter, which was the slowest 

annual pace since the first quarter of 2013. 

     The outturn falls exceeds Bank of England staff forecast of a 0.3% 

expansion, as reported in the August Quarterly Inflation Report and 

affirmed in minutes of the September meeting of the Bank's Monetary 

Policy Committee. 

     The dominant service sector expanded by 0.4% in the third quarter 

of 2017, matching the increase of the second quarter, accounting for 0.3 

percentage points of total growth. 

     But services rose by just 1.5% over the same quarter of 2016, the 

weakest annual growth since the third quarter of 2013. 

     Services comprise 79.3% of total output after recent revisions to 

the National Accounts, up from 78.8% previously. 

     Business services rose by 0.6% in the third quarter, adding 0.2 

percentage points to total growth, powered by increased activity at 

employment agencies and human resources departments, according to a 

National Statistics official. Computer programming services were also 

strong, rising by 1.9%, the official added. 

     Output of services expanded by 0.2% between July and August, 

according to a separate report released on Wednesday, below the MNI 

median forecast of a 0.3% gain, following a revised 0.1% decline in 

July. 

     Over the three months to August, services expanded by 0.4%, down 

from a 0.5% pace in the three months to July, in line with the MNI 

median forecast of a 0.4% gain. 

     The performance of the service sector draws heavily upon estimated 

data, and the Office for National Statistics has penciled in 0.2% growth 

between August and September. 

     Industrial production expanded by 1.0% in the third quarter, adding 

0.1 percentage points to total growth, up from the 0.3% fall in the 

previous period. 

     Manufacturing activity accounted for the strength in industrial 

output, with car production rebounding by 3.7% in the third quarter, 

after a 5.3% fall in the previous three months. 

     ONS statisticians estimated a 0.3% monthly gain in industrial 

output for September. Production accounts for 14.0% of total output, 

after revisions to the National Accounts, down from 14.6% previously. 

     Construction retreated by a quarterly rate of 0.7%, but still 

exerted a neutral effect on growth, after a 0.5% drop in the second 

quarter. The sector has not decreased for two consecutive quarters since 

the middle quarters of 2012. The ONS estimated a 1.0% fall in September. 

Construction now accounts for 6.1% of total output, up from 5.9% in 

previous estimates of GDP. 

     The preliminary estimate of output relies upon hard data for just 

44% of calculations, with the rest drawn from estimates, according to a 

National Statistics official. 

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

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