British Economy Probably Grew in Third Quarter as Manufacturing Rebounds
The U.K. economy probably grew at a faster pace in the third quarter as manufacturing and services industries rebounded from disruptions caused by the royal wedding and the Japanese earthquake, economists said.
Gross domestic product rose 0.3 percent compared with a 0.1 percent increase in the second quarter, according to the median of 36 forecasts in a Bloomberg News survey. The Office for National Statistics will publish the data at 9:30 a.m. on Nov. 1 in London.
Bank of England policy makers expanded stimulus this month for the first time since 2009 after Europe’s debt crisis roiled financial markets and world growth slowed. Markets Director Paul Fisher said in an interview on Oct. 27 there is a “50-50” chance the U.K. economy will shrink in the fourth quarter.
“It’s a bounce back from the second quarter where we had a disruption from all sorts of things,” said London-based UBS AG economist Amit Kara, who predicts growth of 0.5 percent between July and September. Still, “it’s touch and go whether we avoid a recession. We can’t rule out further disruption in the euro area.”
Output was hit in the second quarter as Japan’s earthquake on March 11 disrupted factory-supply chains, while workers booked vacations to take advantage of consecutive four-day weekends to mark Easter and the wedding of Prince William and Kate Middleton on April 29.
The statistics office estimated when it released the second- quarter data that growth would have been about 0.5 percentage points higher excluding temporary factors.
While reports this month showed services and manufacturing industries expanded in September, unemployment reached a 17-year high in the three months through August and consumers are cutting back their spending.
The economy effectively stagnated in the nine months through June as government spending cuts and soaring food and fuel prices eroded household incomes at the fastest pace since the 1970s.
The Bank of England raised the ceiling of its bond-purchase program to 275 billion pounds ($443 billion) from 200 billion pounds on Oct. 6, the biggest expansion since the first round of stimulus in March 2009.
Only one of the economists surveyed forecast a contraction in the third quarter, with the Centre for Economics and Business Research Ltd. projecting a 0.2 percent drop in GDP. At the other end of the range is Janet Henry at HSBC Holdings Plc (HSBA), with a forecast of 0.7 percent growth.
The National Institute of Economic and Social Research said on Oct. 11 that the economy probably grew 0.5 percent in the third quarter. The group, whose clients include the Bank of England and the Treasury, said GDP remains 4 percent below its pre-recession peak in early 2008, suggesting the recovery will be the weakest for almost a century.
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