Productivity monitor - December
Wednesday, 27 Dec 2006 11:26
Britain's economy has performed well in 2006
The British economy remains strong this winter, with GDP growth above expectations and the property market holding up well as 2006 draws to a close.
But concerns are growing about the prospects for 2007 as uncertainty in the labour market and a struggling manufacturing sector begin to act as drags on the economy.
Internationally, Britain's balance of trades are doing well but concern exists that the ailing US economy could impact on UK businesses in the new year.
But you don't need to take our word for it - take a look at the figures for yourself.
The Office of National Statistics is economists' key source for official figures, but the Bank of Scotland and Lloyds TSB also provide detailed economic surveys of their own.
ONS quarterly GDP figures
July to September: GDP rose by 0.7 per cent during the last quarter. British economy growing at fastest rate for two years, driven by service industry expansion.
"The Bank of England expects growth to accelerate to three per cent in 2007, but we suspect that it is more likely to be around 2.5 per cent as the upside is limited by slower global growth and the significant headwinds facing the consumer," comments Global Insight chief UK and European economist Howard Archer.
ONS balance of payments
October: Deficit widens to £9.4 billion. Deficit rose by £1.1 billion.
"Higher foreign earnings on direct investment in the UK" were responsible for the increased deficit," the ONS said.
ONS manufacturing figures
August to October: Manufacturing output grew by 0.3 per cent in last three months. Rolling quarterly growth rate slows from last month's 0.6 per cent.
Richard McGuire at RBC Capital Markets told the Financial Times newspaper that the figures would "raise questions over how much support GDP can expect from the production sector in the final quarter of the year".
ONS employment data
August to October: UK employment flat. Trend in unemployment slowing down as rising unemployment levels possibly beginning to slow.
"Employment is up 175,000 this year for people aged over 50, the number on incapacity benefits is at its lowest since 2000, and the number on lone parent benefits is down by nearly a quarter since 1997. But we can do more," Jim Murphy, minister of state for employment and welfare reform, said.
Bank of Scotland London labour market survey
October: Barometer unchanged from three-month high of 60.0. Strengthening labour market as demand for skilled employees rises.
"The London labour market has strengthened over the past year and growth rates continue to outpace the UK average," Tim Crawford, group economist at the bank, commented.
Bank of Scotland Scottish labour market survey
November: Nine-month low of 59.3 on barometer. Lack of suitable candidates also evident in Scotland, despite demand rising across all sectors.
"The Scottish labour market recorded a pick-up in growth in November although growth rates are now back in line with the UK average after outperforming for most of 2006," Mr Crawford added.
Lloyds TSB business barometer
October: Positive balance of 27 per cent of companies confident about UK economy's prospects. Economic confidence rebounding despite interest rate rise, possibly because companies were expecting the November hike.
Trevor Williams, chief economist at Lloyds TSB Corporate Markets, said: "UK firms saw this latest interest rate rise coming, which could explain why it hasn't made a dent in their outlook."
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