MOMR October 2017
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World Economy

OPEC Monthly Oil Market Report – October 2017

19

UK

Little progress has been reported on the latest developments in

Brexit

negotiations. While some shift

towards a soft Brexit has become visible in the past weeks, the political situation seems to be rather unclear.

In the meantime, the economic activity continues to slow-down. Both quarters in the 1H17 have now been

confirmed to have grown by only 0.3% q-o-q seasonally adjusted (sa). Household expenditures were

reported at a low level of only 0.2% q-o-q growth, the lowest level in almost three years. The unemployment

rate remained surprisingly low as it fell to 4.3% in June from at 4.4% in May. While wage growth in May and

June stood at 2.0% and 2.9% y-o-y, respectively, it fell back to only 1.4% y-o-y in July. This compares to

inflation numbers of 2.6% y-o-y in both June and July. As inflation remained high at 2.9% y-o-y in August, the

Bank of England voiced its concerns about relatively high debt levels of private household in the UK as

interest rates may go up in the near future.

Continued support to the UK economy came from exports, amid the low sterling pound value. Exports

compensated for some domestic economic challenges, as exports rose by 12.8% y-o-y in July, after 15.2%

y-o-y in June. In connection to this more positive development, the

PMI

for manufacturing remained at a high

level of 55.9, only slightly below the 56.7 in August. The services sector PMI even increased a bit, moving to

53.6 in September, compared to 53.2 in August.

Graph 3 - 7: UK exports

Graph 3 - 8: UK PMIs

With indicators supporting a gradual slowdown in the UK economy, the

GDP growth

forecast remains

unchanged at 1.5% for 2017. Growth in 2018 is forecast at 1.4%.

12.8

0

5

10

15

20

25

Jul 16

Aug 16

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Sources: Office for National Statistics and Haver Analytics.

% change y-o-y

53.6

55.9

48

50

52

54

56

58

Sep 16

Oct 16

Nov 16

Dec 16

Jan 17

Feb 17

Mar 17

Apr 17

May 17

Jun 17

Jul 17

Aug 17

Sep 17

Index

Sources: CIPS, IHS Markit and Haver Analytics.

Services PMI

Manufacturing PMI