Financial News: UK Economy Shrinks In October

UK Economy Shrinks In October

(RTTNews) - The UK economy contracted marginally for the second straight month in October largely reflecting the fall in industrial production, official data revealed Friday. Real gross domestic product shrank unexpectedly 0.1 percent in October, the same pace of decline as in September, the Office for National Statistics reported. GDP was forecast to grow 0.1 percent.

Services output showed no growth in October, while industrial production decreased 0.6 percent because of falls in manufacturing and mining and quarrying.

Industrial output was forecast to grow 0.3 percent, following September's 0.5 percent decline. Within industrial production, manufacturing output registered a decline of 0.6 percent after a 1.0 percent fall. Mining and quarrying output slid more sharply by 3.1 percent.

At the same time, construction output slid 0.4 percent, in contrast to the 0.1 percent increase in September.

On a yearly basis, GDP growth improved to 1.3 percent from 1.0 percent in September. Still it was weaker than forecast of 1.6 percent.

In the three months to October, the economy logged a meager growth of 0.1 percent. Services output gained 0.1 percent and construction advanced 0.4 percent. These increases were partially offset by a 0.3 percent fall in production output. "While the figures this month are disappointing, we have put in place policies to deliver long-term economic growth," Chancellor Rachel Reeves said.

ING economist James Smith said growth is likely to outpace much of Western Europe next year following the recent budget, though the downside risks are more obvious than the upside.

Another data from the ONS showed that the visible trade deficit widened to GBP 18.96 billion from GBP 16.32 billion in the previous month. The expected level of shortfall was GBP 16.1 billion.

Meanwhile, the surplus on services rose to GBP 15.3 billion from GBP 12.9 billion a month ago. As a result, the overall trade shortfall totaled GBP 3.7 billion compared to a GBP 3.5 billion shortfall in September.

Earlier in the day, survey data from the market research group GfK showed a slight improvement in British consumer confidence in December. The consumer sentiment index edged up by one point to -17 in December.

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