Economic review: October 2016

Post-referendum data

The Office for National Statistics (ONS) has recently produced an assessment of the post-referendum economy. This concluded that although the picture is still emerging, there has been no major collapse in confidence and within the data that is available there are indications of continued momentum in the economy. 

This has been confirmed by the Index of Services for July 2016 which shows month-on-month growth of 0.4%. This can be interpreted as further evidence that the economy has not shown any immediate signs of major negative effects following the EU referendum decision.

GDP

The latest estimate of gross domestic product (GDP) for Quarter 2 (April to June) 2016 published in September 2016 indicated that the UK economy grew by 0.7%, revised up 0.1 percentage points from the second estimate published in August. This maintains the picture of positive growth in the economy in the run-up to the EU referendum vote in June. 

Investment

Investment as measured by gross fixed capital formation (GFCF) was 1.6% higher in Quarter 2 (Apr to June) 2016 compared with Quarter 1 (January to March 2016). This is the first quarter of positive growth since Quarter 3 (July to Sept) 2015 and the highest growth rate since Quarter 1 (Jan to Mar) 2015.

Sterling effects on prices

Sterling appears to have had a greater impact on PPI input prices than on PPI output prices in July and August 2016. It is likely UK producers have not passed on all of the increase in input prices to their customers, and that latent pressures on output and consumer prices may later emerge.

Annual Survey of Hours and Earnings regional analysis

London has a noticeably smaller concentration of employees earning the minimum wage in 2015 and a greater proportion of people on higher hourly wages compared with the other regions. London also displays the most equal distribution of wages between the sexes in 2015.

This edition of the Economic Review provides a summary of ONS data covering the post-EU referendum period which have been published since the last Review. This supplements the assessment of the post-referendum economy published on 21 September and the previous edition of the Economic Review which provided a summary of data published in August. 

This section of the Review will cover:

• Index of Services for July
• trade statistics for July
• construction output for July
• CPI, PPI and House Price Indices for August
• retail sales for August
• some labour market indicators for August (claimant count and vacancies), and
• public sector finances for August

This summary of recently published data will be an ongoing section for the Economic Review over the coming months as more economic data from Quarter 3 (July to September) 2016 and beyond becomes available. An updated table of forthcoming ONS economic statistics releases and the data periods they cover is at Annex A. Further context for these data is also available at Visual.ONS.

This edition of the Economic Review also provides further commentary and analysis of:

• the latest estimate of gross domestic product (Quarterly National Accounts) for Quarter 2 (Apr to June) 2016
• trends in investment (gross fixed capital formation (GFCF))
• a summary of the effects of changes in sterling on prices
• an analysis of 2015 Annual Survey Hours and Earnings (ASHE) data by region

Josh Beeson, Andrew Banks, Fiona Massey, Daniel Ollerenshaw, Amina Syed, Jamie Clark, James Rowlings, David Roberts, Sunny Sidhu, Yanitsa Petkova and Christopher Watkins.

Source: Office for National Statistics licensed under the Open Government Licence v.1.0.