Proactive Investors - 7.07am: UK narrowly avoids recession but economy stalls in fourth quarter
The UK avoided a technical recession in the fourth quarter but a 0.5% fall in December meant there was no growth between October and December, according to figures from the Office for National Statistics (ONS).
GDP was flat (0.0% growth) in Quarter 4 (Oct to Dec) 2022:▪️ services saw 0.0% growth
▪️ production fell 0.2%
▪️ construction saw 0.3% growth
➡️ https://t.co/xc7Gc9nZeq pic.twitter.com/n51FBeRQkl
— Office for National Statistics (ONS) (@ONS) February 10, 2023
November’s figure was unrevised at growth of 0.1%.
The economy had shrunk by 0.3% between July and September.
A recession is typically defined as when the economy shrinks for two consecutive quarters.
In output terms, the services sector slowed to flat output on the quarter driven by falls in the education, and transport and storage sub-sectors.
Elsewhere, growth of 0.3% in construction was offset by a 0.2% fall in the production sector in the quarter.
In expenditure terms, growth in real household expenditure, government expenditure and gross fixed capital formation was offset by a fall in international trade flows.
Compared with the same quarter a year ago, the implied GDP deflator rose by 6.6%, primarily reflecting higher cost pressures faced by households.
The level of quarterly GDP in the quarter is now 0.8% below its pre-coronavirus (COVID-19) level, the ONS said.
6.57am: FTSE set to open lower, GDP figures awaited
FTSE 100 is expected to open Friday on the backfoot after the record breaking exploits of yesterday with the big question will the UK avoid a technical recession.
Spread betting companies are calling the lead index down by around 26 points ahead of the latest GDP figures which will show whether the UK economy contracted for a second quarter in a row.
Michael Hewson chief market analyst at CMC Markets UK said: “Whatever the outcome of today’s GDP numbers it’s likely to be a close-run thing, but with the September decline of -0.8% set to drop out of the rolling 3-month numbers the UK might avoid a technical recession, depending on how the economy performs in December, with monthly GDP expected to contract by -0.3%.”
“What we do know is that any growth is likely to be anaemic, and 2023 is still likely to be very challenging,” he added.
In the US, the Dow closed Thursday down 249 points, 0.7%, at 33,670, the Nasdaq Composite lost 121 points, 1%, to 11,790 and the S&P 500 dropped 36 points, 0.9%, to 4,082. The benchmarks all ended lower after starting the session in the green.
In Asia on Friday, the Nikkei 225 index closed up 0.3%, while the Shanghai Composite index was down 0.3% and the Hang Seng in Hong Kong shed 2.0%. The S&P/ASX 200 in Sydney closed down 0.8%.
On the corporate front, a trading statement from speciality chemicals firm Victrex (LON:VCTX) and annual results from insurer Lancashire Holdings are in the diary.