UK Economy in Rude Health

The UK economy looks set to continue growing at a fairly solid pace and growth forecasts for the second half of the year and early 2016 are for around 2.25% quarterly growth

Andy Brunner 12 October, 2015 | 4:00PM

The UK economy continued to grow at a very healthy pace during Q2 driven by the 3.2% gain in private sector final domestic demand and July and August data have generally held up well suggesting underlying momentum carried through much of Q3. Further weakness in manufacturing and some recent slowing in services, however, warns of some recent softening in activity.

Outlook

The UK economy looks set to continue growing at a fairly solid pace and growth forecasts for the second half of the year and early 2016 are for around 2.25% quarterly growth. Fundamentals for the consumer remain favourable with household real wages and salaries growing at around 3.5% y/y, consumer confidence well above average and mortgage rates at record lows.

Manufacturing continues to be a concern and growth remains highly services dependent. The latest index of services from the ONS showed growth of 3.1% on a 3m/3m annualised basis but, as noted, the September PMI for services fell sharply. Unless this reverses next month this adds some downside risk to estimates.

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About Author

Andy Brunner

Andy Brunner  is Head of Investment Strategy, Morningstar UK

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