Rate rise likely on new GDP data
Services lead rise in UK economic growth
The UK economy grew at a higher than expected 0.4% between July and September, according to the Office for National Statistics.
Growth, which was expected to come in at 0.3%, was led by services, particularly IT, motor trades and retail. The figure has increased the likelihood of an interest rate rise next week.
There was a 0.2% growth in the service sector in August, led by business services & finance (+0.3%).
At 6pm sterling was 0.97% higher against the dollar at $1.33.
The ONS’s head of national accounts Darren Morgan said: “Growth in the third quarter of 2017 continued at a similar rate as seen in the first half of the year.
“Services, led by increases in IT, motor trades and retail, continued to drive GDP growth. Manufacturing also boosted the economy with an improved performance after a weak second quarter.
But he added: “Construction output fell for the second consecutive quarter, although it remains above its pre-downturn peak.”
John Hawksworth, chief economist at accountancy firm PwC, says that the figures “do not change the big picture for the UK, which is of an economy that has slowed due to higher inflation linked to the weak pound and Brexit-related uncertainty dragging on business investment”.
But he adds: “We should not overdo the gloom as there is nothing in this or other recent data to suggest that the slowdown is in danger of turning into a recession.
“There is also nothing in these figures that would cause the MPC to hold off on the quarter point interest rate rise that markets expect from their meeting next week.”
In London the FTSE 100 index closed 79.33 points or 1.05% lower at 7,447.21.
On Wall Street, stronger-than-expected results and forecasts from companies including 3M and Caterpillar fuelled optimism about economic strength and the Dow Jones Industrial Average closed at another record high.
Tokyo‘s benchmark index has ended its longest winning streak in its history. The market posted an unprecedented 16 straight days of gains, helped by Prime Minister Shinzo Abe’s victory in Sunday’s election, which raised hopes for continued stimulus.
The Nikkei 225 lost 0.5%, or 97.55 points, to finish at 21,707.62, weighed down by losses for exporters.
Oil prices were largely steady on Wednesday, hovering near a four-week high hit a day earlier after top exporter Saudi Arabia said it was determined to end a supply glut.
Brent crude was up 8 cents at $58.41 a barrel this morning, after settling on Tuesday up 96 cents, or 1.7%. U.S. West Texas Intermediate crude was trading down 9 cents at $52.38.