OPEC Monthly Oil Market Report – October 2017
Little progress has been reported on the latest developments in
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
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
unchanged at 1.5% for 2017. Growth in 2018 is forecast at 1.4%.
Sources: Office for National Statistics and Haver Analytics.
% change y-o-y
Sources: CIPS, IHS Markit and Haver Analytics.