Construction and services drive growth, as manufacturing stumbles

Economic Highlights

• The final estimate for UK GDP in Q2 2015 confirmed growth at 0.7%, with annual
growth for 2014 revised downwards 0.1 percentage points to 2.9%. Real household
disposable income continued to expand at a healthy pace, rising 2.0% from Q1 2015.

• The rate of inflation (CPI) dropped to -0.1% in September, driven by the continued fall
in the price of fuel. It remains unlikely a UK rate rise will happen before the end of the
year.

• The latest employment statistics for the three months to August 2015 showed that
employment rose by 140,000, with unemployment falling by 79,000 to a rate of 5.4%.
Average weekly earnings including bonuses rose by 3.0% compared with a year
earlier, whilst pay excluding bonuses was 2.8% higher.

Sector Highlights

• Office – The headline figure for the UK Services PMI fell for the third month in
succession, to 53.3, from August’s 55.6, indicating the weakest rate of growth since
April 2013, albeit still showing signs of expansion. (Markit/CIPS).

• Industrial – the UK Manufacturing PMI for September was 51.5, rounding off one of
its weakest quarters during the past 2 years. That being said, the PMI has been
above the 50.0 no-change mark for 30 months running. (Markit/CIPS).

• Retail – the volume of retail sales in August increased 3.7% compared with August
2014, marking the 29th consecutive month of year-on-year growth (ONS).

• Construction – the UK Construction PMI for September saw a strong expansion to
59.9, up from 57.3 in August. Housebuilding remained the best performing
category, signalling the strongest expansion for 12 months. (Markit/CIPS).

• Residential – UK house prices rose 1.0% in Q3 2015 and increased 3.7% on an
annual basis. Greater London saw prices rise 3.5% over the quarter, with annual
growth accelerating to 10.6% (Nationwide HPI).

• Debt – the Q3 2015 Credit Conditions Survey from the Bank of England reports that
the availability of credit to the commercial real estate sector showed no
improvement in Q3 2015, with no change expected in Q4 2015.

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