The UK economy saw no growth in the final three months of 2019, as manufacturing contracted for the third quarter in a row and the service sector slowed around the time of the election.
The Office for National Statistics (ONS) said the car industry had seen a particularly weak quarter.
The ONS figures also showed the economy grew by 1.4% in 2019, marginally higher than the 1.3% rate in 2018.
Recent surveys have suggested that the economy has picked up in the new year.
Ruth Gregory, senior UK economist at Capital Economics, suggested that the flat growth seen at the end of the year would “prove to be a low point”.
She added: “The pick-up in the surveys of activity and sentiment suggest the first quarter will be much better.
“The GDP figures were not quite as bad as we had feared in quarter four. The stagnation in GDP beat our forecast of a 0.1% quarter-on-quarter fall.”
In December alone the economy grew by 0.3%, the ONS said, reversing the decline seen previously in November.
“It’s likely that political uncertainty and unwinding stockpiles caused the economy to flag at the end of last year,” said Tej Parikh, chief economist at the Institute of Directors.
“However, firms entered 2020 with more of a spring in their step. Confidence has shot up, while hiring plans and investment intentions have also risen a notch, but the post-election bounce may tail off.
Rob Kent-Smith, the ONS’s head of GDP, said: “There was no growth in the last quarter of 2019 as increases in the services and construction sectors were offset by another poor showing from manufacturing, particularly the motor industry.”
The services sector – which accounts for more than three-quarter of the UK economy – grew by just 0.1% in the final quarter of 2019, while the construction sector grew by 0.5%.
However, the manufacturing sector saw output fall by 1.1%. That came after some car factories paused work in November in case Britain left the European Union without a deal on 31 October.
The ONS revised up the growth figure for the third quarter of 2019 to 0.5% from its previous estimate of 0.4%.
The last three months of 2019 also saw the trade deficit in goods and services widen to £6.5bn from the £4bn deficit seen between July and September.
A deficit occurs when the value of a country’s imports in goods and services exceeds what it exports.
The deficit widened largely because of a shrinking of the surplus in UK trade in services.
By contrast, the goods trade deficit shrank in the last three months of 2019. That was mostly accounted for by a £2.2bn decrease in machinery and transport equipment imports, which could suggest that orders might have been brought forward to avoid the (postponed) October Brexit deadline.
For 2019 as a whole, the trade deficit for goods and services narrowed slightly by £0.5bn to £29.3bn.
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US Treasury Secretary Steven Mnuchin attends a session at the Congres center during the World Economic Forum (WEF) annual meeting in Davos, on January 21, 2020.
FABRICE COFFRINI | AFP via Getty Images
The strength of the U.S. economy will prove to be an important factor when voters head to the polls in November, according to U.S. Treasury Secretary Steven Mnuchin, despite a slew of headwinds that could weigh on growth this year.
Mnuchin warned earlier this month that U.S. growth may not hit Trump’s pledged 3% growth in GDP (gross domestic product) in 2020.
Speaking to CNBC at the G-20 Summit in Riyadh, Saudi Arabia, on Sunday, Mnuchin said disruptions at Boeing could cause a 50 basis point drag on growth, compounded by General Motors strikes and the potential impact of the coronavirus outbreak.
“But the real impact in terms of the American economy, wages are going up, more jobs are being created and more people are coming back into the workforce than ever before,” Mnuchin told CNBC’s Hadley Gamble.
“(GDP) is a global statistic, the statistic people really care about is are they working, are they getting more jobs, are they getting more pay? And on that basis, we’re getting all As.”
U.S. unemployment recently hit a 50-year low, continuing a consistent downward trend set in motion in 2010. Real average hourly earnings for all private nonfarm employees increased 0.6% from January 2019 to January 2020, according to the U.S. Bureau of Labor Statistics.
“The change in real average hourly earnings combined with a 0.6-percent decrease in the average workweek resulted in essentially no change in real average weekly earnings over this period,” the Bureau said in a report Friday.
Mnuchin told CNBC he saw the economy being a very “strong factor” in the president’s re-election. “And as you look at the U.S. economy relative to the world economy, the U.S. is the bright spot on world growth,” he said.
China braces for inevitable big hit to economy from virus, says Xi – Financial Post
BEIJING — China will step up policy adjustments to help cushion the blow on the economy from a coronavirus outbreak that authorities are still trying to control, President Xi Jinping was quoted as saying on Sunday.
The situation is showing a positive trend after arduous efforts but there is no room for “weariness and relaxed mentality” among officials, state television quoted him as saying.
“At present, the epidemic situation is still severe and complex, and prevention and control work is in the most difficult and critical stage,” Xi said.
“The outbreak of novel coronavirus pneumonia will inevitably have a relatively big impact on the economy and society,” Xi said, adding that the impact would be short-term and controllable.
The outbreak is one of the most serious public health crises to confront Chinese leaders in decades.
“For us, this is a crisis and is also a big test,” Xi said.
Chinese policymakers have implemented a raft of measures to support an economy jolted by the virus, which is expected to have a devastating impact on first-quarter growth.
Low-risk provinces should focus on restoring work and production in an all-round way, provinces with medium-level risks should aim for an orderly work resumption, while high-risk regions should focus on epidemic controls, Xi said.
The government would step up policy support to help achieve economic and social development targets for 2020, Xi said.
China would maintain a prudent monetary policy and roll out new policy steps in a timely way, he said, adding the government would also study and roll out phased tax cuts to help tide small firms over difficulties.
The government would also take steps to support flexible employment and help college graduates to find jobs, Xi added. (Reporting by Yingzhi Yang and Kevin Yao; Editing by Frances Kerry and Alex Richardson)
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