U.K. services output fell the most in six months in October, indicating a rebound in economic growth lost momentum at the start of the fourth quarter.
Services, which account for about three quarters of the economy, fell 0.7 percent from September, when the industry was unchanged, the Office for National Statistics said in London today. Output rose 1.1 percent from a year earlier.
Data yesterday showed the economy grew 0.6 percent in the third quarter, more than previously estimated. Bank of England policy makers have said the pace of expansion is unlikely to be repeated and forecast stagnation in the current three-month period as Europe’s sovereign debt crisis dents confidence and curbs demand.
The third-quarter GDP data “masks underlying fragility” in the U.K., Simon Hayes, an economist at Barclays Capital in London, said in a note yesterday. “The near-term economic out look is rather bleak” and “recovery hopes rest on the avoidance of a full-blown euro crisis.”
Business services and finance, which account for about 40 percent of the index, fell 0.7 percent in October from the previous month, according to the statistics office. Within that, financial services excluding insurance and pension services dropped 1.5 percent.
Transport, storage and communications plunged 2.5 percent on the month, led by telecommunications and computer programming, while the distribution, hotels and restaurants category slipped 0.2 percent.
In the three months through October, services rose 0.2 percent compared with the previous three months.
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U.S. Personal Spending Rises Less Than Forecast
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U.S. Personal Spending Increased Less Than Forecast Tim Boyle/Bloomberg
A shopper looks at washers and dryers the ABT store in Glenview, Illinois, Aug. 19, 2011.
A shopper looks at washers and dryers the ABT store in Glenview, Illinois, Aug. 19, 2011. Photographer: Tim Boyle/Bloomberg
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QDec. 23 (Bloomberg) -- U.S. consumer spending rose less than forecast in November as wages declined for the first time in three months. Purchases rose 0.1 percent, Commerce Department figures showed today in Washington. Incomes also grew 0.1 percent, the weakest in three months. Meanwhile, orders for U.S. durable goods rose 3.8 percent in November after no change in the prior month. Michael McKee and Lisa Murphy report on Bloomberg Television's "In the Loop." (Source: Bloomberg)
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U.S. Personal Spending Increased Less Than Forecast Victor Blue/Bloomberg
Consumer spending rose less than forecast in November as wages declined for the first time in three months, signaling the biggest part of the U.S. economy may struggle to pick up.
Consumer spending rose less than forecast in November as wages declined for the first time in three months, signaling the biggest part of the U.S. economy may struggle to pick up. Photographer: Victor Blue/Bloomberg
Consumer spending rose less than forecast in November as wages declined for the first time in three months, signaling the biggest part of the U.S. economy may struggle to pick up.
Purchases rose 0.1 percent for a second month, Commerce Department figures showed today in Washington. Incomes also grew 0.1 percent, the weakest in three months, after a 0.4 percent rise in October. The median estimate for spending in a Bloomberg News survey of economists called for a 0.3 percent advance.
Unemployment at 8.6 percent has encouraged retailers such as Best Buy Co. (BBY) and Target Corp. (TGT) to use promotions to bring in customers as wages stagnate. Wrangling over tax cuts and the budget in Congress and Europe’s debt crisis represent risks early next year to faster growth in household purchases, which account for about 70 percent of the economy.
“In the absence of a significant pickup in income, we won’t see a big boost in spending,” said Yelena Shulyatyeva, an economist at BNP Paribas in New York. “The momentum will slow in the fourth quarter, but the economy is still growing.”
Projections among the 79 economists in the Bloomberg survey for spending ranged from increases of 0.2 percent to 0.6 percent. Economists had forecast incomes would rise 0.2 percent, according to the Bloomberg survey.
Stock-index futures pared gains after the report, with the contract on the Standard & Poor’s 500 Index expiring in March rising 0.3 percent to 1,253.1 at 8:57 a.m. in New York. The yield on the benchmark 10-year Treasury note climbed to 1.98 percent from 1.95 percent late yesterday.
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U.S. November Durable Goods Orders Climb 3.8%
Orders for U.S. durable goods rose in November by the most in four months as an increase in demand for aircraft outweighed declines in spending on computers and equipment.
Bookings for equipment meant to last at least three years rose 3.8 percent after no change in prior month that was previously reported as a decline, data from the Commerce Department showed today in Washington. Demand for business equipment excluding military hardware and aircraft dropped 1.2 percent in November, the biggest decline since January.
The decrease in demand for capital goods signals manufacturers may be growing hesitant to boost investment because of political gridlock in the U.S. and Europe’s debt crisis. Support to manufacturing from a government tax incentive that allows for 100 percent depreciation on new equipment this year may be coming to an end.
“It’s still very cautious, people are not expanding,” Donald Ratajczak, chief consulting economist at Morgan Keegan & Co., in Atlanta, said before the report. “People are fixing their equipment but they’re not adding new plant.”
The median forecast of 80 economists surveyed by Bloomberg News projected a 2.2 percent increase in orders following an initially reported 0.5 percent decline in October. Estimates ranged from a drop of 2 percent to a gain of 7 percent.
Consumer spending rose less than forecast in November as wages declined, another report from the Commerce Department showed. Purchases rose 0.1 percent for a second month. Incomes also grew 0.1 percent, the weakest in three months, after a 0.4 percent rise in October. The November gain in income was limited by a 0.1 percent drop in wages and salaries.
Stock Futures
Stock-index futures pared gains after the report, with the contract on the Standard & Poor’s 500 Index expiring in March rising 0.4 percent to 1,254.2 at 8:40 a.m. in New York. The yield on the benchmark 10-year Treasury note climbed to 1.96 percent from 1.95 percent late yesterday.
Durable orders excluding transportation equipment, like commercial aircraft, rose 0.3 percent after a 1.5 percent gain, the report showed. Boeing Co. (BA), the largest U.S. aircraft maker, said it received 96 orders in November, up from 7 the prior month and the most since August.
Orders for non-defense capital goods excluding aircraft, a proxy for business investment in items such as computers, engines and communications gear, fell after a 0.9 percent decline.
