State of the economy: October 2018

United Kingdom Summary

GDP growth rebounded in Q2 2018.

• UK GDP grew 0.4% in the second quarter of 2018, rebounding from 0.1% growth in Q1 2018.
• Service sector growth picked-up in Q2 to 0.6%, supported by faster growth in Distribution, Hotels and Catering and Transport, Storage and Communications.
• The Production sector contracted by 0.8% in Q2 with falling output in Manufacturing and Electricity and Gas Supply.
• Construction sector output rebounded in Q2, growing 0.8% following its contraction at the start of the year.

Unemployment remains low in 2018.

• Latest data for June - August show that the UK unemployment rate fell over the quarter and year to 4.0%.
• The employment rate eased slightly over the quarter but has increased over the year to 75.5%.
• The inactivity rate has fallen slightly over the past year to 21.2%.
• GB nominal and real regular pay growth has strengthened in 2018 growing 3.1% and 0.7% over the year to June-August.
• Labour productivity strengthened in Q2 2018, growing 1.4% over the year, its seventh consecutive quarter of growth.

CPI inflation remains above 2% target.

• The CPI inflation rate fell in September to 2.4%, down from 2.7% in August.
• Downward contributions to the rate came from food and drink alongside transport, recreation and culture, and clothing.
• The inflation rate remains below its recent peak of 3.1% in November 2017.

UK growth forecast to slow in 2018.

• Growth is forecast to slow in 2018 with the IMF forecasting growth of 1.4%, picking up to 1.5% in 2019.
• The slower growth outlook reflects weaker output data at the start of 2018 alongside uncertainty over the terms of the EU withdrawal weighing on private sector activity.

UK GDP Growth

UK Labour Market

UK Labour Productivity

UK CPI Inflation & Interest Rate