–Preliminary Q4 GDP -0.5% q/q; +1.7% y/y
–With no bad weather GDP would have been flat q/q
–Data less reliable than usual and more liable to revision
–Median forecast: +0.4% q/q; +2.6% y/y

LONDON (MNI) – UK economic output unexpectedly fell in the final
quarter of last year for the first time for more than a year, as the
cold weather cut growth significantly, according to figures released by
National Statistics Tuesday.

GDP declined by 0.5% on the quarter in Q4 and was up 1.7% on the
year. The fall completed wrong-footed analysts who had forecast a 0.4%
increase on the quarter and a rise of 2.6% on the year.

Expectations that the Bank of England will tighten policy have
risen sharply since the start of the year, but these figures are likely
to cause a reappraisal of the immediate outlook.

National Statistics said that the cold weather seen towards the end
of last year had likely cut economic growth by 0.5 percentage point,
meaning that taking account of this growth would have been flat on the
quarter.

National Statistics also said that due to the abnormal weather and
the potential impact on the data, it had attempted to gather more data
than usual for December last year, where data at this stage of the
estimation process is limited. It brought forward response chasing from
businesses and carried out further analysis to try and improve the
quality of the estimate.

In spite of the extra work, a spokesman said that these figures
were probably less reliable than usual and were more liable to revision.

The largest hit to growth came from a 0.5% quarterly drop in
service sector output, with all sub-categories posting declines.
Distribution, hotels and restaurants fell 0.5% on the quarter,
transport, storage and communications output was down 0.8% and business
services and finance fell 0.7%.

Construction output plunged 3.3% on the quarter, also hit by the
poor weather.

Manufacturing output managed to continue its recent momentum,
rising 1.4% on the quarter, with the wider measure of industrial
production up 0.9%.

Agricultural output posted a small rise of 0.3% on the quarter.

–London newsroom: 44 20 7862 7492; e-mail:drobinson@marketnews.com

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