In October the country’s construction and manufacturing industries shrank and caused economic growth to stagnate.
GDP only rose by 0.1pc and in both August and September, it was flat. This is due to a cross-sector economic stall.
Data retrieved by the Office for National Statistics found that agriculture sectors were the only services that increased their output during October.
This poor performance in October has caused the quarterly growth to slum to 0.4pc, which stood at 0.6pc during the three-month lead up to September.
Rob Kent-Smith from the ONS has diagnosed the problem to a reduction in automobile sales and a significantly poor performance within the pharmaceutical sector.
He stated that this has been ‘offset’ thanks to improvements made in both the accountancy and IT sectors. He went on to say that in the past quarter, zero growth has been seen in manufacturing – something partly owing to the instability in the pharma sector.
Economists fear the state of affairs could worsen in the near future.
One chief economist, John Hawksworth, has commented on the situation. He has pointed to recent survey data and suggests that November’s overall GDP figures could be negative, if not flat.
He continues to state that the current economic weakening that we are experiencing was highly anticipated considering the prolonged uncertainty set in by Brexit. One prediction is that economic growth will continue this way until Brexit has been finalised. Until then, many businesses are not investing and the general public is not buying the likes of cars and properties.
There was a widening of our trade deficit too, as imports continued to grow faster than exports. During the three-month lead up to October, that deficit increased to £10.3bn from £3.1bn.
The revised trade figures indicate that boosts to GDP through exports in the three months prior to September were not as expected. In October, manufacturing output dropped 0.9pc. Yet, the pharmaceutical industry fell the hardest as output slumped by 5pc. Poor performance was also identified in other areas such as plastics, chemicals and transport equipment. However, an increased output was seen in some areas, including in electrical equipment purchases.
The overall economic stagnation was offset slightly through a 1.8pc increase in quarrying and mining output, while gas and electricity stagnated.
These results tell us that production output comprising of manufacturing and industries like utilities and mining actually rose 0.3pc during the three-month lead up to October.
Over the past 12 months, the construction industry has suffered a steep drop in orders but private housing remains one positive. CREDIT: JOE GIDDENS/PA
The construction industry experienced a hike of 1.7pc during September but then fell by 0.2pc during October.
Despite private housing rising by 2.4pc, there were a significant number of drops. Infrastructure projects and public housing both fell by 3.7pc and 2.4pc, respectively.
Unfortunately, the future does not look any brighter as third-quarter orders plummeted by 30.7pc in comparison with the previous year. This includes the 68pc fall for infrastructure orders and a collapse of 57.1pc in public housing.
The services industry offers the only positive, but considering this is usually one of the most dominant industries, its small output increase of 0.2pc during October does not make up for drops elsewhere.
The biggest growth came from technical, scientific and professional sectors which were supported by growth in storage and transport.
Thomas Pugh of Capital Economics believes this is an indication that the economy had not collapsed.
He continued to predict a fourth-quarter growth around 0.3pc due to suggesting that the slowing down of the economy was a result of temporary factors from previous months which had actually gone on to boost growth in our third quarter.
He identified the poor performance in the services sector as a reflection of the introduction of the EU’s new emission standards and therefore lower car sales. He also stated that a poor performing pharmaceutical industry should not be a concern due to the volatile nature of the industry’s growth.