UK Analysis: Q4 GDP Accelerates on Strong Business Services>

-UK Q4 GDP +0.5% q/q; +1.8% y/y vs +0.4% q/q, +1.7% y/y in Q3

     By Laurie Laird and Jamie Satchithanantham 

     London (MNI) - UK growth accelerated unexpectedly in the fourth 

quarter, powered by a surge in demand for business services in the 

professional and technical sector. 

      Gross domestic product rose by 0.5% in the fourth quarter of 2017, 

according to preliminary data released on Friday, exceeding the median 

MNI forecast of a 0.4% gain, up from the 0.4% pace recorded over 

the third three months of the year.  

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

1.4%, down from the 1.7% pace of the third quarter. 

     That's the joint-slowest pace of annual growth since the second 

quarter of 2012, despite the stronger-than-expected outturn for the 

final three months of 2017. 

     The outturn outperformed the predictions of the Bank of England's 

Monetary Policy Committee which suggested that "GDP growth in Q4 might 

be slightly softer than in Q3," according to minutes of the December MPC 

meeting. 

     Over the 2017 calendar year, growth expanded by 1.8%, a slowdown 

from the 1.9% pace of 2016 and the weakest pace since 2012. 

     The dominant service sector accounted for the lion's share of 

growth in the fourth quarter, expanding by 0.6%, the fastest growth 

since the final quarter of 2016, up from a 0.4% increase in the previous 

period, accounting for 0.4 percentage points of total growth. Services 

comprise 79.3% of total output. 

     Business services grew by 0.8%, contributing 0.28 percentage points 

to total growth, with recruitment agencies accounting for much of the 

gain. Demand for professional staff such as lawyers, architects and 

scientists was particularly strong, according to a National Statistics 

official. 

     Output of services expanded by 0.4% between October and November, 

according to a separate report released on Friday, matching the MNI 

median forecast of a 0.4% gain, following a 0.2% increase in October. 

     Over the three months to November, services expanded by 0.4%, up 

from a 0.3% pace in the three months to October, above the MNI median 

forecast of a 0.2% gain. 

     The performance of the service sector draws heavily upon estimated 

data, and the Office for National Statistics has penciled in no growth 

between November and December. 

     Industrial production expanded by 0.6% in the fourth quarter, 

powered by a 1.3% gain in manufacturing, which added 0.1 percentage 

point to total growth. 

     ONS statisticians estimated a 0.9% monthly fall in industrial 

output for December. Production accounts for 14.0% of total output. 

     Construction declined by a quarterly rate of 1.0%, the worst 

performance since the third quarter of 2012, shaving 0.1 

percentage points from growth, after a 0.5% drop in the third quarter.  

The ONS estimated a 0.1% fall in December. Construction accounts for 

6.1% 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$]