Consumer spending and retail growth are stronger but manufacturing is falling back, figures show.
British businesses are becoming more reluctant to spend, according to the Office for National Statistics, as the UK relies heavily on consumers to prop up the post-Brexit vote economy. In its latest monthly snapshot of the UK economy, the ONS said there were signs that business investment growth was starting to slow. Investment by companies grew by 0.9% in the third quarter, down from 1% in the previous quarter. It fell by 1.6% on an annual basis.
“While there has been stronger consumer spending and retail growth, the contribution from investment has showed signs of waning slightly in recent quarters,” the ONS said.
Investment among Britain’s manufacturers started to fall back from the turn of 2016, while investment in other sectors has driven an overall increase. Machinery and IT investment is still 8% below its pre-crisis levels. Nick Vaughan, the chief economist at the ONS, said that while the Brexit vote in June had had a notable impact on the value of the pound, driving the currency sharply lower, the broader economy was as yet relatively unscathed.
He said: “The economy as a whole has continued to grow roughly on trend with both consumer spending and business investment holding up. Meanwhile, the number of people in work has remained at a record high, although there are perhaps some early signs that the long and steady growth in employment we’ve seen these last few years is starting finally to slow.”
The ONS said that there were signs in recent months that the weaker pound, which makes British goods cheaper abroad, had boosted exports.
“Anecdotal evidence from our survey respondents suggests that some buyers brought forward UK export orders in order to take advantage of the lower levels of sterling,” it said.
In value terms, manufacturing export turnover rose by 9.6% in the year to September, while domestic turnover was roughly flat. However, the weaker pound is starting to push up the prices of raw materials for UK companies, which are having to pay more for imported goods and oil, which is priced in dollars. The services sector, including hotels, restaurants and bars, as well as professional and business services, has been strong compared with other parts of the UK economy since the financial crisis. However, the ONS said it was being held back by financial services, where output remains 10% below the levels in the third quarter of 2009.
Author – Angela Monaghan
Tags: Brexit Vote, British Business, British Manufacturing, Business Investment, Business Investment Growth, Financial Services, Investment, National Statistics, Post-Brexit Economy, UK Companies, UK Economy, UK Export Orders, UK Investment, Weaker Pound