Economic growth steady but subdued while labour market growth softens
Q3 GDP growth rate was unrevised in its final estimate at 0.4%. However, revisions to the composition of growth left it looking more balanced over the quarter. Employment continued to fall in the three months to October, but the labour market remains relatively tight.
The ONS’s final estimate of Q3 GDP growth was unrevised at 0.4%, continuing the pace of steady but subdued momentum seen since the start of 2017. However, the ONS’ revisions to the composition of growth left it looking more balanced over the quarter, with the breakdown showing a stronger contribution from business investment and exports.
However, while growth in household spending picked up, new data revealed that its foundations remained shaky, with real incomes still under pressure and consumers financing spending by running down their savings.
The CBI’s distributive trades survey seemed to suggest some further strength in consumer spending in December, with retail sales rising for the second month running on a year ago in the run up to Christmas. However, retail sales and orders both disappointed expectations of somewhat stronger growth.
In the three months to October, employment fell by 56,000 to 32 million according to labour market data from the ONS. Although this marks the second consecutive rolling quarter of falling employment, it follows a long run of strong growth. Furthermore, the labour market remains relative tight, with the unemployment rate unchanged at 4.3%, the lowest since 1975. But while wage growth (excluding bonuses) rose by 2.3% on the year in the three months to October, it continued to run well below CPI inflation, meaning that real wages continued to fall, further underlying the challenging conditions facing households.
For more information contact Charlotte.Dendy@cbi.org.uk