The Bank of England in London. on Nov. 1, 2017.DANIEL LEAL-OLIVAS/Getty Images
Britain’s economy grew more quickly than expected in May, providing some momentum for the new government of Prime Minister Keir Starmer but adding to doubts about whether the Bank of England will cut interest rates next month.
Economic output increased by 0.4% in May, after a 0.2% rise in April, the Office for National Statistics said. A Reuters poll of economists had pointed to another 0.2% monthly increase.
The strength of the upturn could dissuade the BoE from beginning to cut interest rates as soon as Aug. 1, its next scheduled monetary policy announcement date. Three policy-makers this week emphasized the strength of domestic price pressures.
The chance of a rate cut in three weeks’ time fell below 50% on the futures markets from just above 50% on Wednesday.
May saw a broad-based increase in economic output, with the services, manufacturing and construction industries all growing and the latter up by 1.9% on the month, driven by house-building.
The figures represented an early boost for the new Labour administration, which has set itself the aim of achieving the fastest growth among the Group of Seven advanced economies on a sustained basis.
“The improving economic outlook suggests the government may benefit from the economic recovery being stronger than most forecasters anticipate,” Ashley Webb, an economist with consultancy Capital Economics, said.
Britain’s economy appears to have snapped out of its low-growth rut, at least for now. Output has grown by 1.5% since the turn of the year, marking its best five months since early 2017, excluding the rebound from the COVID-19 pandemic.
Goldman Sachs on Thursday nudged up its growth forecast for 2024 to 1.2% from 1.1%.
Still, the longer-run picture remains weak, with the economy only 2.7% larger than its pre-pandemic level of late 2019.
According to the latest quarterly data, only Germany has fared worse since the pandemic.
Over the three months to May, the economy expanded by 0.9%, the strongest reading since the three months to January 2022, compared with the consensus forecast for a 0.7% expansion.
The BoE said last month it expected the economy would grow by 0.5% over the second quarter – something that now looks likely to prove too low.
“These GDP figures may make an August rate cut less likely by providing those rate setters who are concerned about underlying price pressures with sufficient confidence about the UK’s economic recovery to continue putting off loosening policy,” Suren Thiru, economics director at accountancy body ICAEW, said.
Separate ONS data showed Britain’s overall trade deficit, excluding precious metals, narrowed to 3.2 billion pounds ($4.1 billion) in May from 4.7 billion pounds in April.
But goods exports to the European Union fell to their lowest since January 2022, when Brexit customs checks were introduced, and consistent with levels seen during the late 1990s.
Starmer has said he wants to reduce trade frictions with the EU but he will not agree to joining the bloc’s single market.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
