2021-11-11-牛津经济研究院-UK_Latest_GDP_numbers_offered_a_curate_s_egg_7页_265kb

Weekly Economic Briefing Summary | UK

Core Content

The UK's latest GDP data for September and Q3 showed a mixed performance, with a notable acceleration in growth but significant underlying challenges. The September GDP growth of 0.6% month-on-month (m/m) was the strongest since June, but this was largely driven by the health sector, which saw a surge in face-to-face appointments and increased Covid testing. Without this boost, growth would have been only 0.2% m/m.

The economy remains 0.6% below its pre-pandemic level from February 2020, though some sectors, particularly social consumption, have started to recover. Meanwhile, revisions to Q3 GDP data revealed a weaker performance than initially reported, with growth in August revised down from 0.4% to 0.2%, and July revised from -0.1% to -0.2%, leading to a final Q3 growth of 1.3%.

Main Points

• GDP Growth:

  • September GDP rose by 0.6% m/m, the strongest since June.
  • Q3 GDP growth was 1.3%, below the MPC's November forecast of 1.5% q/q.
  • The economy is still 0.6% below pre-pandemic levels.

• Sectoral Performance:

  • Services output grew by 0.7% m/m, with social consumption sectors recovering slightly.
  • Manufacturing output fell by 0.1% m/m, while construction output increased by 1.3% m/m.
  • Car production dropped by 8.2% m/m due to supply chain disruptions, and car sales fell sharply, affecting distribution output by 1.5% m/m.

• Consumer Spending:

  • High-frequency data and retail surveys suggest that consumer spending has not yet been significantly dented by cost of living pressures.
  • Retail spending in October rose by 1.3% y/y, though it fell by 0.2% m/m, partly offset by a spike in fuel sales in September.
  • Fuel sales rose 2.9% m/m in September, but dropped rapidly in October as fears of a petrol shortage subsided.

• Labour Market:

  • The end of the furlough scheme in September had a limited impact, with 87% of furloughed workers returning to work.
  • Unemployment rates dropped to 4.4% in the three months to September.
  • Pay growth is expected to slow further, from 7.2% y/y in July to 5.8% y/y in September.

• Inflation:

  • CPI inflation is expected to rise to 4.0% in October, following a dip in September due to base effects.
  • Factors contributing to inflation include the 12% increase in energy price caps and the rise in VAT for hospitality and tourism sectors.

• Public Finances:

  • Government borrowing is expected to fall in line with the OBR's revised deficit forecast.
  • Public sector net borrowing in September was £21.8bn, down from £28.8bn in the same period last year.
  • The OBR lowered its borrowing forecast for 2021-2022 to £183bn from £233.9bn, due to strong tax receipts and reduced public spending.

Key Forecasts

Economic Outlook

• The recovery has entered a more challenging phase as the easy gains from reopening the economy are exhausted and policy support is being withdrawn.
• Supply chain disruptions and rising inflation are key headwinds.
• Despite these challenges, the economy is expected to continue growing, though at a slower pace, compared to the pre-pandemic decade.
• The MPC is likely to delay any rate hikes until February, as the current growth momentum is not strong enough to justify immediate action.

Week Ahead Highlights

• 16 November: ILO unemployment rate (Jul-Sep) and Average earnings (total pay and regular pay).
• 17 November: CPI inflation (m/m and y/y), RPI inflation (m/m and y/y), Producer input and output prices (m/m and y/y).
• 19 November: Retail sales (m/m and y/y), Public finances (PSNB).

Research and Publications

• Recent reports highlight the uneven recovery across sectors, with services showing strong growth but manufacturing and distribution still struggling.
• The strong jobs market is seen as a potential offset to the drag from rising prices.
• The economy continues to recover from pandemic-related losses, though the pace is slowing.
• The BoE is under pressure to adjust monetary policy in response to the evolving economic environment.

Contacts

• Andrew Goodwin: Chief UK Economist at Oxford Economics
• Email: agoodwin@oxfordeconomics.com
• Phone: +44(0)20 3910 8013