UK economic growth slowed in the three months to the end of October suggesting that a boost to growth over the summer was merely a blip, according to official figures published on Monday.
Britain’s economy was 0.4 per cent bigger in the three months to the end of October compared with the previous three months, in line with analysts’ expectations and down from the 0.6 per cent rolling three-month rate during the third quarter of the year.
Falling car sales and a sharp contraction in pharmaceuticals production were offset by an expansion in professional services, especially IT and accounting, the Office for National Statistics said.
Some economists had hoped that a recovery in real wage growth would support consumer spending during the final three months of the year as British consumers felt more able to spend, but instead the data signal that the growth in spending over the summer was transitory.
“The weaker [national income] figures for October seem to be mainly a reflection of the unwinding of some temporary factors which had boosted growth in Q3, rather than significant slowdown in underlying activity,” said Thomas Pugh, UK economist at the Capital Economics consultancy.
Britain’s retail sector was buoyed by good weather, the World Cup and the royal wedding over the summer, but Monday’s figures suggest that the economy is now returning to the tepid growth rates that have been the norm for the past decade.
There was little sign in the data that Brexit uncertainty was having a greater effect on growth than it has at any other point in the two-and-a-half years since the referendum, with changes to car emissions tests and output in the erratic pharmaceuticals sector representing the biggest drags on growth.
Rob Kent-Smith, ONS head of national accounts, said: “[National income] growth slowed into the autumn after a strong summer, with a softening in services sector growth mainly due to a fall in car sales.”
Car sales have been disrupted across the EU this autumn as manufacturers have struggled to adapt to the introduction of new emissions tests. These backlogs helped contribute to a contraction in the retail sector, which includes car dealers.
Meanwhile, pharmaceuticals manufacturing fell 3 per cent compared with the previous three months. The sector can be highly volatile as pharmaceuticals are often approved for sale in batches, leading to sharp fluctuations in output.
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