The UK economy grew slightly in February increasing hopes it is on its way out of recession.
The economy grew by 0.1%, official figures show, boosted by production and manufacturing in areas such as the car industry.
The Office for National Statistics (ONS) said that construction was dampened by wet weather though.
This is an early estimate, but signals how the UK, which entered recession at the end of 2023, is faring.
Liz McKeown, director of economic statistics at the ONS, said that looking across the three months to February as a whole, the economy grew for the first time since last summer.
‘Turning a corner’
Chancellor Jeremy Hunt suggested that the new figures were a “welcome sign that the economy is turning a corner”.
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“We can build on this progress if we stick to our plan,” he added.
Growing the economy was one of five key pledges that Prime Minister Rishi Sunak made last year as consumers and businesses were squeezed by higher prices and interest rates.
Labour shadow chancellor Rachel Reeves, however, argued that “Britain is worse off with low growth and high taxes”.
She added: “The Conservatives cannot fix the economy because they are the reason it is broken.”
[BBC]
Most economists, politicians and businesses like to see gross domestic product (GDP) overall rising steadily because it usually means people are spending more, extra jobs are created, more tax is paid and workers get better pay rises.
The official statistics body also revised its previous estimate for gross domestic product (GDP) in January from 0.2% growth up to 0.3%.
In February, output from the UK’s production industry led the economy’s growth, rising by 1.1%, compared to a fall of 0.3% in January.
The construction sector saw output fall by 1.9% though as persistent rain hampered building projects.
The services sector, which includes things like hairdressing and hospitality, also grew a little with public transport and haulage having a strong month.
Yael Selfin, chief economist at KPMG UK, said that February’s overall figures offered a strong signal that the recession, which is defined as when an economy shrinks for two three-month periods in a row, may already be over.
Growth is likely to have been boosted by cuts in National Insurance and slowing price rises, meaning that businesses and households will have more confidence in their finances and therefore spending.
But she added that consumer spending is still fragile and business investment could be dented by uncertainty around a general election.
Andrew Watson says the metal manufacturing firm he works for has seen growth overall [BBC]
Andrew Watson is chief financial officer at Goodfellow, a metal manufacturer based in Cambridge which supplies research and development around the world.
He said last year the firm was hit by disruption from attacks on shipping vessels in the Red Sea and supply chains were tight after the pandemic, “but overall we saw growth”.
“You’ve got this weird mix of the economy not doing so well in terms of GDP and yet we feel like we’ve got opportunities to grow – and we just have to push forward and access those opportunities,” he said.
He suggested that growth in the UK had been “anaemic” since covid, with more opportunities presenting themselves in the United States.
Other countries’ economies have also faced energy price shocks and supply chain delays in the wake of the pandemic driving up costs, as well as the potential knock-on effects from conflict overseas, but the UK has seen growth stagnating for some time.
‘Industries still struggling’
Dr Roger Barker, director of policy at the Institute of Directors, suggested that there were few signs of a “strong” economic reboundin the UK and that some parts of the services industry like hotels and hospitality were still struggling.
Other economists pointed out the impact of previous interest rate rises by the Bank of England was still feeding through to the economy.
Currently, experts are split on when the UK’s central bank may start cutting interest rates over the summer, potentially providing some relief to mortgage-holders and borrowers.
The Bank’s Monetary Policy Committee takes into account a range of economic figures when making its decision on its base rate, although monthly figures such as February’s can be quite volatile and are “unlikely” to do much change to its thinking, said Danni Hewson, head of financial analysis at AJ Bell.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
