Updated official data shows UK GDP contracted by 0.3% in July-September, worse than previously thought
Today’s GDP report confirms expectations that the UK economy is heading towards a recession, says Victoria Scholar, head of investment at interactive investor:
“UK final Q3 GDP fell to -0.3% versus the preliminary estimate of -0.2% and expectations for -0.2%, negatively impacted by the additional bank holiday day for Queen Elizabeth’s funeral. The services sector grew by 0.1% but the production sector shrank by 2.5% with real GDP now 0.8% below its pre-pandemic levels, revised down from a previous estimate of 0.4%. Real household disposable income suffered the fourth consecutive quarter of negative growth falling 0.5% in Q3. However the household saving ratio increased to 9% versus 6.7% in the previous quarter.
The data confirms expectations that the UK economy is heading towards a recession given the downward revision to the latest quarterly GDP figure. While the service sector output was revised slightly higher, construction swung into negative territory and manufacturing was revised lower. All three sectors have been trending lower underscoring the widespread impact from the broad-based macroeconomic headwinds.
Gross fixed capital formation (GFCF) increased by 1.1% in Quarter 3 2022, revised down from a first estimate increase of 2.5%. The latest quarterly rise was mainly driven by a boost in government investment of 17.3%, although business investment is now estimated to have fallen by 2.5% in Quarter 3 2022.
Business investment saw notable revisions to estimates across quarters because of updated survey data.
