The British economy is growing faster than expected; Oil prices fall as US mulls release of large oil reserves – Business Live | company

Good morning and welcome to our ongoing coverage of the world economy, financial markets, the eurozone and the economy.

The UK economy grew faster than previously thought in the final three months of 2021 as the country was hit by the Omicron wave.

GDP in the world’s fifth-largest economy grew 1.3% in the fourth quarter from the previous three months, according to the Office for National Statistics, ahead of a preliminary growth estimate of 1.0%.

According to the ONS, the largest contributors to this increase came from human health and social work activity, driven by increased GP visits earlier in the quarter and a sharp increase in coronavirus testing and tracing activity, as well as the expansion of the immunization program.

However, consumer spending growth was revised down to 0.5% from 1.2%. Some economists said the upward correction appeared to have been driven by higher inventories, which is not a sustainable source of growth.

Paul Dales, senior UK economist at Capital Economics said:

The upgrade in GDP growth in the fourth quarter of last year may not be as encouraging as it looks as much of it appears to have come from inventories while consumer spending has been revised down. The latter suggests that real income pressures are beginning to take hold, despite the cushion provided by the fall in the savings rate.

Overall, the data leaves the economy just 0.1% smaller than pre-pandemic levels in Q4 2019. The 9.4% contraction in GDP in 2020 has been revised to a smaller 9.3% contraction during the GDP growth of 7.5% in 2021 has been revised down to 7.4% growth. GDP growth is expected to be around 4.0% this year, if not a little weaker, Dales said.

Office of National Statistics (ONS)

GDP grew 1.3% in Q4 2021 (revised from 1.0% growth), down 0.1% from its pre-pandemic peak in Q4 2019

March 31, 2022

Oil prices fell by as much as $5 a barrel this morning after news the United States was considering releasing up to 180 million barrels from its strategic oil reserves over several months, in what would be the largest on record, Reuters reported.

Brent crude is now trading $4 lower at $109.44 a barrel, while US light crude is at $103.28 a barrel.

Activity in China’s manufacturing and service sectors fell simultaneously in March for the first time since the start of the Covid-19 pandemic in 2020, adding to the urgency for more policy intervention to stabilize the economy. The Chinese authorities have already indicated that they will intervene with further support measures.

The official manufacturing PMI fell to 49.5 from 50.2 in February, the China Bureau of Statistics said, while the non-manufacturing PMI slipped to 48.4 from 51.6 in February.

Asian stocks fell after the data. Japan’s Nikkei closed down 0.7%, while Hong Kong’s Hang Seng fell 1% and the Shanghai Composite Index fell 0.45%.

European stocks opened higher after yesterday’s declines. The FTSE 100 index is 0.2% higher at 7,594, while Germany’s Dax is up 0.6% and France’s CAC is up 0.3%.

Inflation in France rose to 4.5% in Marchfrom 3.6% in February on higher energy, food and service prices, France’s statistics office said.

The agenda

  • 8.55am BST: Germany Unemployment for March (Forecast: -20k)
  • 10am BST: Eurozone unemployment rate for February (forecast: 6.7%)
  • 10am BST: Italy Inflation for March (preliminary) (Forecast: 6.4%)
  • 1.30pm BST US PCE Price Index for February

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