The U.K. economy surpassed its pre-pandemic size in November for the first time with surprisingly strong growth before the omicron variant of the coronavirus struck.
Gross domestic product rose 0.9% from October, when it gained 0.2%, the Office for National Statistics said Friday. Output was 0.7% above its level in February 2020, before the pandemic started.
November saw strength across the board with services, construction and manufacturing all expanding more strongly than forecast. However, economists are predicting contractions in both December and January when the virus led consumers to cancel events and hit companies with unprecedented levels of staff absences.
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“The U.K. economy was in good shape as it entered into the latest wave of the pandemic,” said Dean Turner, an economist at UBS Global Wealth Management. “January is likely to be another weak month, but we expect the economy to recover reasonably swiftly thereafter.”
On a quarterly basis, GDP in the fourth quarter will reach or surpass its level at the end of 2019 unless output falls by more than 0.2% in December. Bloomberg Economics is predicting a 0.5% fall.
What Bloomberg Economics Says…
“The U.K. economy carried significantly more momentum than expected before the omicron variant of Covid-19 emerged. Output is likely to fall modestly amid a surge in infections and tighter government restrictions. But the impact is likely to be short-lived and we expect the economy to make up lost ground this year
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–Dan Hanson, Bloomberg Economics. Click for the REACT
The figures many fuel speculation that the Bank of England will raise interest rates again next month to quell inflation, which it expects to leap over 6% this year, triple the targeted level. Markets are betting the benchmark interest rate will be increased by around a percentage point over the next year.
Chancellor of the Exchequer Rishi Sunak dubbed the figures “amazing” and said they’re “a testament to the grit and determination of the British people.”
The British Chambers of Commerce said the figures are unlikely to be sustained and that risks are piling up for the economy. Those include a squeeze on consumers coming with a jump in taxes and energy bills due to hit in April.
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“Surging inflation and persistent supply-chain disruption may mean that the U.K.’s economic growth prospects remain under pressure for much of 2022,” said Suren Thiru, head of economics at the business lobby group.
Service industries that account for about 80% of the economy expanded 0.7% in November, slightly more than expected. Manufacturing gained 1.1% and construction by 3.5%, both figures more than five times the pace economists had forecast.
That suggests that the supply disruptions that weighed on industry in October eased somewhat during the following month.
Separate figures showed imports of goods excluding precious metals rose by almost 5% in November, while exports fell 1%.
Imports from countries outside the European Union were higher than those from EU countries for the 11th consecutive month, with the gap now at the widest point of the year. Imports of fuel account for most of the difference.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
