United Kingdom posts 2% rise in GDP in 2016

However, that performance wasn’t so much due to weakness here at home.

The first official estimate from the Commerce Department showed gross domestic product increased by 1.9 percent from the same period in 2015.

UK GDP was 0.6% in the final quarter of 2016, slightly ahead of forecasts and in line with third-quarter growth of 0.6%. The agency said structural trends, including baby-boomer retirements, are driving a slowdown in economic growth compared with past decades.

Poor soybean crops in South America led to a huge surge in USA exports in the summer, but that rise was temporary.

Nancy Curtin, chief investment officer at Close Brothers Asset Management, said: “The “America First” expansionary policy, which is expected to include increased infrastructure spending and highly pro-business policies, should stimulate further growth in GDP”. Excluding aircraft, order rose strongly. Shipments of these items rebounded 0.7% following a 0.5% November decline.

Investment in the auto sector slumped to £1.66 billion ($2.1 billion) in 2016 from £2.5 billion ($3.2 billion) in 2015, according to the Society of Motor Manufacturers and Traders. Some forecasters have raised their projections for US growth this year and in 2018 in anticipation of tax cuts and infrastructure spending.

The dollar index also fell 0.2 per cent to 100.45, although it rapidly bounced back up. Even so, under a Trump administration, it is likely that a more hawkish outlook will prevail and that it makes a March hike more likely. The services aggregate was the sole contributor to the quarter-on-quarter percentage change in GDP to 2 decimal places. In the last quarter it rose by 2.5% which is still however lower than the 3% expected benchmark.

Matching the quarterly rate, real GDP also increased 1.9% in Q4 vs. the year-earlier level, the best gain in 2016 for annual changes. Yet demand has risen since oil prices have stabilised above $50 a barrel.

Regionally, new home sales increased 48.4% in the Northeast.

Meantime, a measure of economic conditions three to six months in the future showed continued strengthening. The combined consumer contribution to the headline number was +1.69%, down -0.34% from 3Q-2016. The latest reading met a consensus estimate from Wall Street analysts.

It means the British economy grew 2 percent over the full year, one of the fastest rates among developed countries. The December decline was the largest since April 2012.

While the United Kingdom appears to have dodged a serious blow to its growth in 2016, many feel the decision to leave the European Union will cause serious damage to the economy in the coming years.