Aug. 26 (Bloomberg) -- U.K. economic growth slowed in the second quarter as manufacturing shrank, adding pressure on Prime Minister David Cameron to do more to boost the economy.
Gross domestic product rose 0.2 percent, the same as estimated a month ago, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 30 economists was for 0.2 percent growth. Output rose 0.7 percent from a year earlier.
The economy has barely expanded since September as government budget cuts and accelerating inflation sap consumer confidence. Cameron is under mounting pressure to find ways to spur growth as the euro-region debt crisis and global market turmoil threaten the biggest markets for British goods.
"At the moment Cameron's OK, but a double-dip recession or decline in GDP would pressure on the government plans," said George Buckley, an economist at Deutsche Bank AG in London. "It will take a while to get out of this consumer recession. We may see a period of slower growth than we've had over the past decade."
In its second estimate of GDP, the statistics office normally includes provisional data on income and expenditure, including consumer and government spending, business investment and exports. These were omitted today because the ONS is revising its procedure for publishing the national accounts. The figures will be published, along with the revised Blue Book, on Oct. 5, the statistics office said.
Revisions
Small downward revisions to industrial production were offset by an upward revision to services output, the statistics office said.
Services output grew 0.5 percent in the second quarter from the first, boosted by transport and business services and finance. Construction also rose 0.5 percent. Manufacturing fell 0.5 percent and total industrial product, which includes mining and utilities' output, dropped 1.6 percent, the biggest contraction since the first quarter of 2009.
Industrial output was partly hit by warm weather in April that depressed demand for fuel and maintenance work that saw mining output fall at its fastest pace since 2006.
Other special factors included the extra public holiday to mark the royal wedding in April and supply disruptions stemming from the Japanese earthquake. GDP would have been about 0.5 percent higher in the absence of these events, the statistics office said.
Weakening
Recent data suggest the pace of underlying activity is weakening. London-based WPP Plc, the world's largest advertising company, said Aug. 24 profit rise in the first half on growth in Asia and Latin America. Debt problems in countries such as Italy and Greece, and the U.S. federal deficit are among the "storm clouds everywhere" threatening ad spending, Martin Sorrell, chief executive officer of London-based WPP Plc said on Aug. 24.
An index of retail sales in August fell to its lowest level since the Conservative-led coalition took office in May 2010 and consumer confidence declined for a second month in July, reports showed yesterday.
The Bank of England kept its benchmark rate at a record low of 0.5 percent this month and officials discussed whether they needed to resume buying assets to spur growth. Policy makers held their bond-purchase plan at 200 billion pounds ($325 billion).
The risk of "severe stress and dislocation in financial markets" stemming from the market strains would "have a significant impact on the U.K. economy," King said Aug. 16.
The bank forecasts the economy will grow about 1.5 percent this year and 2.2 percent next year, less than its projections in May for 1.9 percent and 2.5 percent.
Growth in Germany, the largest European economy, slowed to just 0.1 percent in the second quarter from 1.3 percent in the first and in France the economy stalled. Consumer spending is weakening in the U.S., which was stripped of its top credit rating by Standard & Poor's earlier this month.
Cameron has staked his reputation on carrying out his plans to eradicate the bulk of the fiscal deficit by 2015. The 80 billion-pound ($131 billion) program of spending cuts will lead to the loss of more than 300,000 government-funded jobs.
"They've painted themselves into a corner when they put austerity measures into place," Chris Williamson, chief economist at Markit Economics in London, said in an interview. "The need is to come up with some growth stimulus plans that aren't going to cost too much money."
Source: http://www.sfgate.com
Gross domestic product rose 0.2 percent, the same as estimated a month ago, the Office for National Statistics said today in London. The median forecast in a Bloomberg News survey of 30 economists was for 0.2 percent growth. Output rose 0.7 percent from a year earlier.
The economy has barely expanded since September as government budget cuts and accelerating inflation sap consumer confidence. Cameron is under mounting pressure to find ways to spur growth as the euro-region debt crisis and global market turmoil threaten the biggest markets for British goods.
"At the moment Cameron's OK, but a double-dip recession or decline in GDP would pressure on the government plans," said George Buckley, an economist at Deutsche Bank AG in London. "It will take a while to get out of this consumer recession. We may see a period of slower growth than we've had over the past decade."
In its second estimate of GDP, the statistics office normally includes provisional data on income and expenditure, including consumer and government spending, business investment and exports. These were omitted today because the ONS is revising its procedure for publishing the national accounts. The figures will be published, along with the revised Blue Book, on Oct. 5, the statistics office said.
Revisions
Small downward revisions to industrial production were offset by an upward revision to services output, the statistics office said.
Services output grew 0.5 percent in the second quarter from the first, boosted by transport and business services and finance. Construction also rose 0.5 percent. Manufacturing fell 0.5 percent and total industrial product, which includes mining and utilities' output, dropped 1.6 percent, the biggest contraction since the first quarter of 2009.
Industrial output was partly hit by warm weather in April that depressed demand for fuel and maintenance work that saw mining output fall at its fastest pace since 2006.
Other special factors included the extra public holiday to mark the royal wedding in April and supply disruptions stemming from the Japanese earthquake. GDP would have been about 0.5 percent higher in the absence of these events, the statistics office said.
Weakening
Recent data suggest the pace of underlying activity is weakening. London-based WPP Plc, the world's largest advertising company, said Aug. 24 profit rise in the first half on growth in Asia and Latin America. Debt problems in countries such as Italy and Greece, and the U.S. federal deficit are among the "storm clouds everywhere" threatening ad spending, Martin Sorrell, chief executive officer of London-based WPP Plc said on Aug. 24.
An index of retail sales in August fell to its lowest level since the Conservative-led coalition took office in May 2010 and consumer confidence declined for a second month in July, reports showed yesterday.
The Bank of England kept its benchmark rate at a record low of 0.5 percent this month and officials discussed whether they needed to resume buying assets to spur growth. Policy makers held their bond-purchase plan at 200 billion pounds ($325 billion).
The risk of "severe stress and dislocation in financial markets" stemming from the market strains would "have a significant impact on the U.K. economy," King said Aug. 16.
The bank forecasts the economy will grow about 1.5 percent this year and 2.2 percent next year, less than its projections in May for 1.9 percent and 2.5 percent.
Growth in Germany, the largest European economy, slowed to just 0.1 percent in the second quarter from 1.3 percent in the first and in France the economy stalled. Consumer spending is weakening in the U.S., which was stripped of its top credit rating by Standard & Poor's earlier this month.
Cameron has staked his reputation on carrying out his plans to eradicate the bulk of the fiscal deficit by 2015. The 80 billion-pound ($131 billion) program of spending cuts will lead to the loss of more than 300,000 government-funded jobs.
"They've painted themselves into a corner when they put austerity measures into place," Chris Williamson, chief economist at Markit Economics in London, said in an interview. "The need is to come up with some growth stimulus plans that aren't going to cost too much money."
Source: http://www.sfgate.com
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