The UK economy is growing steadily but slowly, next week’s numbers could show.
The NIESR is likely to estimate on Tuesday that real GDP grew by around 0.4 per cent in the three months to October. This is well within a margin of error of its growth rate all year, implying stableish growth. However, this is below the long-term average growth we saw before the 2008 crisis, which is consistent with the likelihood that the crisis and fiscal austerity have dampened long-term growth.
We should, however, see good news from the industrial sector. If the ONS’s estimates for September output are consistent with their estimate of GDP, they’ll show that both industrial and manufacturing output rose by 0.4 per cent in September, and by 1 per cent quarter-on-quarter. This would, however, still leave the level of manufacturing output below not only its 2007 level but also its 2000 level.
Other numbers will show two drags upon growth. If construction output is in line with the ONS’s GDP estimates, it will have fallen in September and in Q3, leaving it lower than in late 2016. This would be consistent with the likelihood that uncertainty about the effects of Brexit is delaying investment in long-lived assets: private sector industrial construction has been especially weak.
Also, Thursday’s figures will show that the UK’s trade gap widened in Q3 – possibly to a record high – as export volumes fell and imports rose. This tells us that GDP growth is wholly due to domestic demand, mostly consumer spending. It also confirms that sterling’s fall last year has not boosted net trade, which is what economists had expected.
In the eurozone, meanwhile, we should see more evidence that the region is doing well. Although official figures might show that German and Italian industrial production dipped in September, this would follow some strong months. In the quarter as a whole, output should be up strongly in both countries. French figures too should also show some growth.
Retailing, however, might be a little weaker. Although sales should have risen in the euro zone in September after falling in the summer, they might be flat quarter-on-quarter. It’s too soon to say, however, whether this is the start of a sustained slowdown, or just a pause in an upward trend.
We could also see mixed news about the UK housing market. The Halifax could report that prices are now rising again, having fallen in the first half of the year. The RICS’s survey, on the other hand, could be downbeat in particular about the London market.
