Today brings us up to date in terms of official data on the performance of the UK economy in the first half of 2017. Whilst expectations are low rather than stellar the last week or so has brought a little more optimistic tinge to things. This started with the retail sales numbers last week. From last Thursday.
In the 3 months to June 2017, the quantity bought (volume) in the retail industry is estimated to have increased by 1.5%, with increases seen across all store types…….Compared with May 2017, the quantity bought increased by 0.6%, with non-food stores providing the main contribution.
This contrasted with the fall of a similar amount seen in the first quarter of the year which meant that we got back to levels seen at the end of 2016 or around 2.6% higher than in the second quarter last year.
This was added to by better news on the tourism front albeit for only some of the latest quarter.
For the period March to May 2017, spend in the UK by overseas residents increased 14% on the previous year to £5.6 billion………During the period March to May 2017, there were 2% more visits abroad by UK residents compared with the corresponding period a year earlier, and they spent 1% more on these visits
So whilst there was still a considerable trade deficit it did shrink a bit compared to last year as we presumably see a beneficial impact of a lower exchange rate for the pound.
Yesterday came news from the Confederation of British Industry that the manufacturing was in pretty good shape.
Production among UK manufacturers grew at the fastest pace since January 1995 in the three months to July, according to the latest quarterly CBI Industrial Trends Survey……….Output growth is expected to continue to grow strongly in the quarter ahead and manufacturers are upbeat about prospects for overall demand. Domestic orders are expected to continue growing strongly, while expectations for growth in export orders improved to a four-decade high
This was upbeat as you can see and came with positive expectations from all of employment, investment and exports. It also came with some better inflation news.
Meanwhile, input cost pressures cooled in the quarter to July and are expected to soften further in the near-term, while factory gate price inflation is also expected to be more subdued.
This poses a few questions as whilst this is to some extent consistent with the Markit PMI business survey although it was more subdued and had a fading in June. It is much less in line with the official data which has shown only a little growth up to May.
There was some good news on the production front here as well. From City-AM.
A fully-electric version of the Mini is to be built at BMW’s plant at Cowley, in Oxford, the car firm has announced.
Actually whilst good news it is more accurate to say that it will be assembled there. Also in the light of the announcement that sales of petrol and diesel cars will be banned from 2040 it was interesting to see that BMW is heading down that road to at least some extent.
By 2025, BMW expects electric vehicles to make up between 15 and 25 per cent of sales. It currently produces electric models at 10 plants worldwide.
Today’s GDP Data
Here we go.
UK gross domestic product (GDP) was estimated to have increased by 0.3% in Quarter 2 (Apr to June) 2017.
So some but not a lot and it was driven by a very familiar sector.
The growth in Quarter 2 2017 was driven by services, which grew by 0.5% compared with 0.1% growth in Quarter 1 (Jan to Mar) 2017.
As I regularly point out this sector must be 80% of our economy by now as again and again it grows faster than the other sectors.
The services aggregate was the main driver to the growth in GDP, contributing 0.42 percentage points. Production and construction recorded falls in Quarter 2 2017 of 0.4% and 0.9% respectively, each contributing negative 0.06 percentage points to GDP.
This had an interesting corollary though.
Construction and manufacturing were the largest downward pulls on quarterly GDP growth, following 2 consecutive quarters of growth.
As I have noted above this is very different from the “Production among UK manufacturers grew at the fastest pace since January 1995 ” of the CBI and the growth recorded in the Markit business surveys. I note that Chris Williamson of the latter has been on the wires.
Regular readers will be aware of my particular doubts about the official data on the UK’s construction sector although there was an interesting reply from the Mayor of West Yorkshire who said that elections always cause slow downs as people wait for the result.
The Film industry
There was good news on this front.
The second largest contributor was motion picture activities, which grew by 8.2% and contributed 0.07 percentage points to GDP growth….. Motion picture activities are a subset of the transport, storage and communications sector, which grew by 1.0%.
Actually only a couple of weeks or so ago Albert Bridge was closed for filming at the weekend and yesterday I noted filming taking place in Battersea Park. This is of course purely anecdotal but this sector has been mentioned in GDP despatches before in recent times. For more information we get referred to the BFI website which does not have the numbers until tomorrow but the ones for the first quarter were strong and perhaps provide a guide.
The total UK spend and budget of these films was £747 million and £983 million respectively, a substantial increase from UK spend of £231 million and total budget of £318 million in Q1 2017. UK spend, as a percentage of budget, was the highest since 2013, at 76%.
The only cloud in this silver lining is that we may have to start being more tolerant of some of the extraordinary statements made by luvvies, excuse me I mean economic miracle workers.
So the UK economy is grinding on in a slow way as we see the annual rate of growth fall to 1.7%. Also the news from looking at the data on a more personal level shows the minimum rate of growth possible.
GDP per head was estimated to have increased by 0.1% during Quarter 2 2017.
We also learn that the first quarter may not have been the type of statistical quirk we see regularly from the US but of course much more data will be needed for us to be sure of that.
On the more positive side this was always going to be the awkward period after the EU leave vote as higher inflation from the Pound’s fall causes not only lower real wage growth but actual falls.
Real earnings declined despite historically low unemployment. Adjusted for inflation, average weekly earnings fell by 0.7% including bonuses and by 0.5% excluding bonuses, over the year ( to May). For total real pay (including bonuses) this is the largest 3-month average year-on-year decrease since the 3 months to August 2014.
Also the film industry numbers make me wonder about the UK football premiership where the numbers are ballooning but the latest update I can find is this from E&Y.
The Premier League and its Clubs together generated over £6.2 billion in economic output that contributed approximately £3.4 billion to national GDP in 2013/14.
Surely there has been a fair bit of growth? Although of course the flow of money in then sees a flow of money out in transfer fees. Some are claiming that so far this year the defence budget of Manchester City exceeds that of around 25 countries.