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Real household income shrank again
Real household disposable income fell by 0.5% during the third quarter of this year, as the cost of living crisis hit people, today’s GDP report showed.
It is the fourth consecutive quarter of negative growth in the RHDI, says the ONS.
Although incomes have increased, they have not kept pace with rising prices (‘real’ incomes are adjusted for inflation).
Increases in housing costs (such as gas and electricity), transportation, miscellaneous goods and services, and food and non-alcoholic beverages drove inflation during the quarter.
This ONS Explains:
Within the RHDI, nominal gross disposable income rose 1.8%. Growth in social benefits excluding social transfers and wages and salaries boosted nominal income in the quarter, with adjustments for changes in pension entitlements not affecting the calculation of disposable income.
However, the household expenditure implicit deflator rose 2.4%, outpacing nominal income growth. This is weaker than the growth in inflation seen in previous quarters as spending on restaurants and cafes as well as spending by UK tourists abroad eased slightly.
Introduction: UK economy shrank faster than thought in Q3
Good morning, and welcome to our rolling coverage of business, financial markets and the world economy.
The UK economy shrank faster than first thought in the summer, new data shows, as the country teeters on the brink of recession.
UK GDP fell by 0.3% in the third quarter of 2022 (July to September), below the first estimate of a 0.2% contraction, the Office for National Statistics reported.
Disappointingly, the ONS estimated that UK GDP was still 0.8% below its pre-coronavirus (COVID-19) pandemic level, revised up from a previous estimate of 0.4% below. That means the UK is still lagging behind other G7 countries.
The entire output during the third quarter of the year production field All 13 manufacturing sub-sectors fell by -2.3%, including declines.
This services field (latest segment of the economy) grew by 0.1% while Construction field 0.2% contraction (instead of growth as previously thought).
Real household spending fell by an revised 1.1% in Q3 2022, driven by net declines in tourism, transport, household goods and services, and food and drink.
GDP fell 0.3% in Quarter 3 (July to September 2022), revised up from a 0.2% decline, with:
▪️ Services at 0.1% (revised from 0.0%)
▪️ Manufacturing -2.8% (revised from -2.3%)
▪️ Construction at -0.2% (revised from 0.6%)➡️ https://t.co/ALn0Sl72UV
— Office for National Statistics (ONS) (@ONS) December 22, 2022
ONS Director of Economic Statistics Darren Morgan Says today’s data shows the economy has performed “slightly less well” than previously thought:
A bank holiday for Queen Elizabeth II’s state funeral in September also affected growth in Q3 – leading to a bounceback in October.
Many economists predict that the UK will contract in the fourth quarter of 2022, a technical recession, and will struggle in 2023 as well.
John LeaperChief Investment Officer at Titan asset Management Says today’s ‘Door’ figures set scenario for 2023 recession:
UK GDP fell meaningfully to -0.3% in the third quarter. That’s worse than expected and brings the annual number to just 1.9% from 2.4% previously. It is the lowest reading since June 2021 following a sharp jump in activity coming out of the Covid slowdown. It is not too surprising, though concerning, to see household consumption and total business investment decline meaningfully as the economic climate continues to deteriorate.
This sets the scenario for 2023 and is consistent with our expectations for a slowdown next year.
agenda
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9.30am GMT: UK reports “Rising food prices and impact on consumers”
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1.30pm GMT: US weekly unemployment figures
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1.30pm GMT: US Q3 GDP report (final estimate)
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