Britain’s economy experienced a slowdown in the third quarter of 2015, hit by shrinking construction and manufacturing activity, official data showed on Tuesday. Another factor was a decline in manufacturing, down 0.3%. The construction sector was weaker than hoped, but it is an inherently volatile, and small, part of the economy.
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Kristian Rouz – The UK’s economic expansion slowed below expectations in Q3 as worldwide headwinds might be taking their toll on industrial production and construction, while other sectors fared relatively well.
It is the first time in more than the three years that the industry has posted a negative score in the quarterly output figures. “David Morrison, market strategist at SpreadCo, said the GDP data should reduce the likelihood of a rate hike from the Bank of England”.
Building gradually: The ONS said that unusually wet weather in August may have played a role in the 2.2 per cent decline in construction industry output.
“The slowdown in growth seen over the past quarter should prompt further caution from the Bank of England with regard to increasing interest rates, as the economy is still in the process of recovery”.
“Overall the domestic economy looks in reasonable health, with growth solid, if unspectacular, employment at an all-time high and inflation low”. Earlier, Chancellor George Osborne said there were more “tough decisions” to come and that his Autumn Statement, due on 25 November, would include “long-term investments for the future”.
‘We continue to forecast no change in interest rates until May 2016.
‘The breakdown of growth will likely reinforce concern that United Kingdom growth remains too reliant on the services sector and consumer spending, ‘ said Howard Archer, chief European and United Kingdom economist at Markit.
Carney said in July growth needs to be sustained at a faster quarterly rate than 0.6 per cent for spare capacity to be eliminated.
The primary factor in the drop, however, was the 2.2% fall in construction, which followed an increase of 1.4% in Q2. “We are still seeing a “Strowl of the Shoppers” more than a “March of the Makers”.
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He said: “We’re six or seven years into a deleveraging process which may last 25 years – a period of slower growth than we got used to pre-financial crisis”.
