UK’s economic output falls 0.2% in Q3, manufacturing hardest hit

MADRID (ICIS)–The UK’s GDP fell 0.2% in the third quarter, compared with the second, as the services sectors stalled and chemicals and wider manufacturing sectors posted falls in output, the Office for National Statistics (ONS) said on Friday.

Moreover, the ONS’s monthly statistics for GDP growth in September showed a contraction of 0.6%, although this could be in part due to the bank holiday declared for the state funeral of Queen Elizabeth II, a period during which some businesses shut or reduced activity.

A negative GDP reading for the third quarter is in line with the pessimistic assumptions by the UK’s central bank, the Bank of England (BoE), which earlier in the year predicted a recession would start in Q4.

Two consecutive quarters of negative growth constitutes a recession.

INDUSTRY BEARS BRUNT
High energy and raw materials costs, as well as a slowdown in consumer spending, hit the UK’s manufacturing sectors hard in Q3.

“In output terms, there was a slowing on the quarter for the services, production and construction industries,” said the ONS.

With inflation at multi-decade highs and consumers prioritising their spending, the key services sectors – of which the UK’s is highly dependent – posted flat output, but retail felt the pinch of consumers’ wariness to spend on non-basic items.

“The services sector slowed to flat output on the quarter driven by a fall in consumer-facing services, while the production sector [manufacturing] fell by 1.5% in Q3, including falls in all 13 sub-sectors of the manufacturing sector,” added the ONS.

ALL DOWN
Chemicals was one of those sub-sectors hardest hit, adding to the fall already posted in the second quarter.

Output in the petrochemicals-intensive construction sector, however, increased in the third quarter by 0.6%, compared with the second, although this represented a slowdown in the pace of growth.

“The largest negative contribution [to overall growth in manufacturing] came from the manufactures of basic metals and metal products, and manufactures of chemicals and chemical products,” said the ONS.

“As reported in our GDP monthly estimate [for August], there were mixed comments from manufacturers, with some firms suggesting shortages of supplies, while others reported these challenges were easing.”

Source: ONS

Front page picture: A pedestrian passes a closed retail unit on Oxford Street in London
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