The preliminary estimate of third quarter GDP confirmed that the UK economy grew by 0.5% Q/Q, in line with expectations and with the advance reading. The details are somewhat disappointing as only government consumption (0.9% M/M) and inventories added to growth, while household consumption stagnated in the three months to September. Gross fixed capital formation (-0.2% Q/Q) and net-exports posted a drag on growth. In the third quarter, UK growth picked up after three disappointing quarters, but the breakdown of the figures is discouraging as growth was only based in a inventories and government consumption, bolding ill for the coming quarters.
According to the CBI industrial trends survey, UK manufacturers reported a weakening in total orders in November (-19 from -18), to the lowest level in more than one year. Especially export orders deteriorated significantly (-31 from -14). Expectations of output contracted for a second straight month (-8 from -11), but improved slightly from October. The sharp fall back in export orders, probably due to developments in the euro zone, is worrying and will probably lead to further cutbacks in production in the coming months.