UK GDP expands by 0.6% as companies sector drives progress – enterprise reside | Enterprise

Key occasions

UK heading for bronze medal in G7 progress contest

Labour’s objective is to safe the best sustained progress within the G7.

In the present day’s GDP knowledge suggests the financial system was close to the entrance of the G7 pack as the brand new authorities took workplace, however not prime of the rostrum.

Knowledge launched in a single day exhibits that Japan grew at an annualised fee of three.1% within the second quarter of 2024 – which implies a quarterly rise of just about 0.8%.

That places Japan forward of the US, the place GDP elevated at an annual fee of two.8% in Q2 (or quarterly progress of 0.7%).

Development has been extra modest within the eurozone, which solely expanded by 0.3% in Q2 as Germany shrank barely.

We don’t get official Q2 knowledge for Canada till the tip of August, although; Statistics Canada says the most recent knowledge means that the financial system expanded 0.5% within the second quarter of 2024.

However as issues stand…

Japan: +0.8% progress in Q2

US: 0.7% progress in Q2

UK: +0.6% progress in Q2

Canada: estimated to have grown by 0.5% in Q2

France: 0.3% progress in Q2

Italy: 0.2% progress in Q2

Germany: contracted by 0.1% in Q2

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Reeves: We’ll make all of the nation higher off

Chancellor Rachel Reeves shouldn’t be hanging out the bunting.

Following the information that the financial system grew by 0.6% in April-June (a good progress fee), Reeves says:

“The brand new Authorities is below no phantasm as to the dimensions of the problem we have now inherited after greater than a decade of low financial progress and a £22 billion black gap within the public funds.

“That’s the reason we have now made financial progress our nationwide mission and we’re taking the powerful choices now to repair the foundations, so we will rebuild Britain and make each a part of the nation higher off.”

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In the present day’s progress statistics present extra proof that the financial system is steadily turning a nook as the brand new authorities takes workplace, says Jake Finney, economist at PwC.

Finney expects robust progress within the second half of the yr too:

UK actual GDP expanded by 0.6% within the second quarter of 2024, powered by robust progress within the companies sector, even if exercise flatlined in June.

“There may be good cause to anticipate that the second half of 2024 can be robust too, on condition that wages are rising in actual phrases and the Financial institution of England has began to loosen financial coverage.

Our modelling signifies that the financial system will develop by 1% throughout 2024 as a complete, up from 0.1% final yr. Although even this might be an underestimate, if there may be an upturn in shopper spending because the financial local weather improves.

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Election uncertainty and strikes might have hit progress in June

Pre-election uncertainty, and industrial motion, might each have weighed on the financial system in June.

The Workplace for Nationwide Statistics says anecdotal proof from companies suggests some shoppers had been reluctant to position orders till they knew who had gained the election.

That might have contributed to the shortage of progress in June.

The ONS says:

Feedback supplied for June 2024 recommended some industries might have been affected by the overall election held on 4 July 2024. In a spread of industries throughout the financial system, companies acknowledged that prospects had been delaying inserting orders till the result of the election was recognized. These feedback lined all of producing, building, and companies.

A strike by junior docs in late June, and the influence of final yr’s Hollywood strikes, might even have hit exercise.

The ONS provides:

Whereas maybe not as steadily talked about as in current months, industrial motion in sure industries was additionally cited as a doable cause for lowered output.

This was acknowledged as a cause for lowered output in human well being with the junior docs strikes in direction of the tip of June, and in TV and movie manufacturing the place the Display screen Actors Guild strikes in America in 2023 are nonetheless affecting UK manufacturing schedules.

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Path for UK rate of interest cuts ‘appears to be set’

The UK financial system is in ‘good well being’, says Neil Birrell, chief funding officer at Premier Miton Buyers:

Following this morning’s Q2 GDP report, Birrell says:

“The second quarter looks as if a very long time in the past, however the GDP knowledge confirms that the UK financial system is in good well being. The Financial institution of England is within the good place, not like different central banks, of getting a degree of surety within the knowledge it’s seeing, when setting coverage.

With inflation enjoying ball as effectively, the trail to decrease rates of interest appears to be set, the timing of the cuts is now the main target.”

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Up to date at 02.21 EDT

GDP per head decrease than a yr in the past

Whenever you alter for inhabitants adjustments, progress was much less vigorous

The ONS experiences that actual GDP per head is estimated to have elevated by 0.3% in Quarter 2 2024 – solely half as quick because the headline progress fee for the quarter.

Actual GDP per head is 0.1% decrease in contrast with the identical quarter a yr in the past.

GDP per head, or per capita, is often used as a broad measure of common residing requirements or financial well- being.

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The UK financial system has lastly shaken off its slumber of current years, says Ben Jones, lead economist on the CBI:

“After a robust efficiency in Could, a slowdown in GDP progress was at all times on the playing cards for June. However a second successive quarter of above-trend progress suggests the UK financial system has lastly shaken off its slumber of current years.

“We predict the quarterly knowledge most likely overstates the underlying momentum within the financial system, with current CBI surveys of exercise remaining pretty subdued. However companies nonetheless seem assured that the restoration will proceed.

“After a difficult, few years, and forward of the Autumn finances, the main target is shifting to the steps wanted to boost the UK’s progress fee over the long-term. This might embrace the reforms set out in our current enterprise tax roadmap, which may incentivise non-public funding and along with a Internet Zero Funding plan enhance inexperienced progress, one of many quickest rising sectors within the nation.”

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This chart exhibits how the financial system has hauled itself again to progress this yr, after a grim 2023:

However, our economics correspondent Richard Partington factors out that this yr’s progress follows “a lacklustre efficiency over the previous decade, whereas excessive residing prices, elevated rates of interest, and faltering productiveness beneficial properties hold a lid on momentum”.

The chancellor, Rachel Reeves, has focused rebooting the financial system as Labour’s No 1 precedence, arguing that stronger progress would assist enhance residing requirements and lift extra tax income to restore battered public companies.

Extra right here:

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ONS: UK financial system has now grown strongly for 2 quarters

The UK has now grown “strongly” for 2 quarters in a row, says ONS director of financial statistics Liz McKeown:

“The UK financial system has now grown strongly for 2 quarters, following the weak point we noticed within the second half of final yr.

“Development throughout the three months was led by the service sector, the place scientific analysis, the IT trade and authorized companies all did effectively.

“In June progress was flat with companies falling, because of a weak month for well being, retailing and wholesaling, offset by widespread progress in manufacturing.”

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Up to date at 02.08 EDT

Financial system stagnated in June

In the present day’s GDP report additionally exhibits the financial system didn’t develop in June.

GDP confirmed no change in June, the Workplace for Nationwide Statistics experiences, following progress of 0.4% in Could.

Digging into the small print… companies output fell by 0.1% in June, whereas manufacturing output grew by 0.8% within the month, and building output grew by 0.5%

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Up to date at 02.15 EDT

UK grows 0.6% in Q2

Newsflash: The UK financial system grew by 0.6% within the second quarter of the yr, because it continues to drag away from final yr’s shallow recession.

That’s a slight slowdown on the primary quarter, the place the financial system expanded by 0.7%, however nonetheless a wholesome progress fee – and in keeping with expectations.

The Workplace for Nationwide Statistics experiences that the companies sector drove progress, whereas the manufacturing sector and building each shrank barely.

In contrast with a yr in the past, actual GDP is estimated to have elevated by 0.9%.

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Up to date at 02.14 EDT

This morning’s knowledge would be the first estimate of GDP in June, rounding off the second quarter of the yr.

However earlier month-to-month knowledge has proven that the financial system flatlined in April, earlier than rising by 0.4% in Could – which was seen as an early enhance for the Labour authorities.

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Introduction: UK GDP in focus

Good morning, and welcome to our rolling protection of enterprise, the monetary markets and the world financial system.

How strongly, or weakly, was the UK financial system rising on the finish of Rishi Sunak’s premiership?

We’ll discover out shortly, when GDP knowledge for June – and for the second quarter of 2024 – are launched.

Metropolis economists predict the UK posted 1 / 4 of strong progress. GDP is forecast to have grown by 0.6% in April-June, which might be a slight slowdown on the 0.7% recorded in January-March.

However in June alone, the financial system might have stalled – with no progress forecast.

Sanjay Raja, chief UK economist at Deutsche Financial institution, says the service sector was driving exercise within the final quarter:

On our calculations, the companies financial system will doubtless bounce up by 0.7% q-o-q – regardless of anticipated contractions in each the manufacturing and building sectors over the identical quarter.

On the expenditure aspect, we anticipate authorities spending, enterprise funding, inventories, and internet acquisitions to offer the majority of the raise to quarterly GDP.

The energy – or in any other case – of the UK financial system will even affect how quickly the Financial institution of England feels assured to chop rates of interest once more, after inflation rose by lower than anticipated in July:

The agenda

7am BST: UK GDP report for June

7am BST: UK commerce report for June

7am BST: UK GDP report for Q2 2024

9am BST: Norwegian central financial institution rate of interest resolution

9.30am BST: UK labour productiveness statistics

1.30pm BST: US weekly jobless claims

1.30pm BST: US retail gross sales for July

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Up to date at 01.49 EDT