Recent figures from the Office for National Statistics (ONS) reported a modest 0.4% growth in the UK Economy from August to October 2018. This growth is slightly lower than Q3 2018, mainly due to the lack of growth in the manufacturing sector, a small decline in the pharmaceutical sector and solid stable performance in the construction sector.
Growth Domestic Product (GDP) grows slowly in Q3 2018
GDP growth from August to October 2018 2017 has grown by 0.4%, compared to the previous quarter. This was driven primarily by the services sector, though both the construction and production sectors contributed towards this growth too.
| Aug-18 | Sep-18 | Oct-18 | |
|---|---|---|---|
| GDP | 0.0% | 0.0% | 0.1% |
| Index of Services | 0.0% | -0.1% | 0.2% |
| Index of Production | 0.0% | 0.0% | -0.6% |
| Manufacturing | -0.1% | 0.2% | -0.9% |
| Construction | -0.3% | 1.7% | -0.2% |
| Agriculture | 0.1% | 0.1% | 0.1% |
Source: ONS
How are services contributing to the positive GDP growth?
Over half of the positive GDP growth in Q3 was contributed by the services sector (some 0.23% out of the total 0.4% of growth). Comprised primarily by the information and communications sectors, growing by an impressive 1.7%, followed by the professional activities sector, growing by 1.3%, accounting and computer programming were the main drivers of this growth.
Manufacturing Industry showed no growth
Growth in both the manufacturing of transport equipment and manufacturing sectors have been in decline over the past year, with rolling three-month growth at 0.3% for production, and flat growth in the manufacturing sector.
Construction growth falls, from a high base
Rolling three-month construction growth was 1.2% in October in the construction industry, following a peak in July 2018 which was more of an anomalous trend.
The UK Economy: Broader Overview
Since the original Brexit referendum and continued Brexit negotiations, the overall performance of the UK economy has bounced back from the start of the year, where growth stood at around 0.1%, and now at 0.4%. The hot summer in 2018 encouraged consumer spending and a high peak of growth at 0.7% in a three-month rolling average to August.
How does this fare with other G7 economies? Not great; the UK sits just above Italy in terms of economic growth, so, at the bottom of the league table. Some research suggests that the UK economy is between 1 and 2.5% smaller than it would have been without the referendum vote.
