Pound edges up as UK economy grows by 0.3% in second quarter - as it happened

• UK retail sales weakest for more than a year
• UK GDP growth confimed at 0.3% but exports and consumer spending weak
• UK sees slowest growth among G7 countries
• Spanish economy continues good performance
• UK car production accelerates in July

2.21pm BST

The UK economy grew by 0.3% in the third quarter, in line with the initial estimates.

But consumer spending, exports and business investment all proved disappointing. The weak pound following the Brexit vote has hit people's pockets but not proved as much of a benefit to exporters as expected. The consumer squeeze left retail sales at their weakest since July 2016, according to the CBI.

1.47pm BST

On the US jobs figures, Dennis de Jong, managing director of UFX.com, said:

Today's initial jobless claims data, while up from last month, will be welcome news for President Trump as his government continues pointing to solid labor market figures as the benchmark for economic strength.

The US President took to social media earlier this week to claim his tenure at the White House has already created over one million jobs and, while figures may be debated, jobless claims look to be heading towards a multi-decade low.

1.44pm BST

Weekly initial jobless claims in the US rose last week but by slightly less than expected.

They climbed from 232,000 the week before to 234,000, but this was below the forecast of 238,000.

1.00pm BST

The Jackson Hole meeting of central bankers, sponsored by the Kansas City Federal Reserve, is in focus because of speeches by ECB boss Mario Draghi and Fed chair Janet Yellen.

Draghi's speech will be closely watched for clues about an end to its bond buying programme, while Yellen is expected to comment on the prospect of future rate rises.

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12.49pm BST

The weak pound is hitting consumer spending more than it is benefiting exporters, it seems. Our economics editor Larry Elliott writes:

The downside to a weak pound is immediately apparent because imports get dearer and foreign holidays get more expensive. With sterling at its lowest level for eight years, there have been plenty of horror stories of travellers from the UK being gouged by foreign exchange bureaux.

The benefits of a weaker currency tend to be less obvious but are potentially significant nonetheless. Exports become cheaper and the UK becomes a more attractive destination for overseas tourists. This leads to an improvement in the balance of payments, something that is sorely needed in Britain's case.

Related: Weak pound is hitting spending rather than boosting UK trade | Larry Elliott

12.31pm BST

More UK recession talk:

Greater-than-evens chance UK will enter technical #recession, says @fathommacro, citing latest data pic.twitter.com/S5ZJLGW3lv

11.38am BST

Today's mini-recovery in sterling is hardly convincing. Connor Campbell, financial analyst at Spreadex, said:

The bar has been set so low for the pound this week that the confirmation of a measly 0.3% Q2 GDP reading gave the currency a helping hand.

Investors clearly weren't ready to take a look at the ins and outs of the GDP report - household spending growth is at its lowest since the end of 2014, while business investment plunged from 0.6% in Q1 to 0.0% in Q2. Instead ignoring all this cable climbed 0.1%, flopping back over $1.28, while against the euro the pound jumped 0.4%. As ever it is important to note that kind of growth barely begins to scratch the surface of the losses suffered by the pound against its Eurozone peer this summer, with sterling still stuck under a1.09.

11.24am BST

The pound may be edging up after the GDP data, but trade weighting sterling - a measure based on how much trade is done with different countries and in various currencies - is close to a record low.

At the moment it is up 0.27% at 74.8, but is not far off the trough of 73.3 reached in December 2008 during the financial crisis. The pound has been hit by continuing concerns about the Brexit negotiations, as well as recent strength in the euro.

11.07am BST

More signs of weak UK consumer spending.

Retail sales are at their weakest since July 2016 according to the latest CBI report. Its distributive trades survey showed a retail sales balance of -10, compared to +22 in July and the expectation of a figure of +14.

Despite the warmer weather at the start of the month, retail sales have cooled as higher inflation continues to squeeze consumers' pockets. Meanwhile, deteriorating sentiment regarding the business situation has combined with falling headcount among retailers.

Looking ahead, firms do expect sales growth to recover, but the pressures on household budgets are set to persist, given little sign of wages picking up.

Grocers saw stable sales on the year, following strong growth last month, and footwear and leather performed well, whilst specialist food and drink stores reported another month of significantly falling sales.

Year-on-year internet sales growth slowed, edging further below the long-run average, but growth is expected to pick up next month.

11.01am BST

Here is our GDP story, focusing on the weak consumer spending figures. Richard Partington reports:

Spending by British consumers is growing at the weakest rate in almost three years, as households squeezed by rising prices tighten their belts.

Household spending growth slowed to 0.1% in the three months to June, the Office for National Statistics said, the slowest rate of quarterly growth since the final three months of 2014. Business investment in the British economy showed no growth at all in the second quarter.

Related: UK consumer spending is growing at weakest rate in nearly three years

10.58am BST

Guardian economics writer Phillip Inman says the lack of an export surge in the latest GDP figures to counter higher priced imports has left Britain with a trade problem:

A significant depreciation of sterling in the wake of the Brexit vote was expected to boost exports. It has a little, but not enough to offset the extra cost from more expensive raw materials.

It means that the latest figures for second quarter GDP show that net trade was zero, putting a drag on GDP growth. And it has dragged since sterling first began to depreciate at the end of 2015.

10.34am BST

The fluctuations in the pound continue.

Sterling has now risen 0.17% to $1.2820 while it is 0.31% better against the euro at a1.0873.

10.33am BST

More reaction to the GDP numbers:

10.17am BST

The UK is the slowest growing G7 economy this year, with the Brexit risk dampening business investment and the pound's fall hurting consumers more than it helped exports, according to Pantheon Macroeconomics.

Looking ahead, we expect the economy to continue to struggle, with GDP rising by just 0.2% in both Q3 and Q4. Recent surveys of export orders have picked up, but exporters are too reliant on imports for net trade to fully offset a further slowdown in consumers' spending. Indeed, CPI inflation still has further to climb, and the sharp fall in consumers' confidence over the last two months suggests that households won't continue to cut their saving rate. Meanwhile, we expect Brexit risk to increasingly bear down on business investment as the UK's exit date draws nearer.

10.06am BST

Here's some commentary on the GDP figures:

9.58am BST

The revised growth figures showed the service sector was the biggest riser, up 0.5% quarter on quarter.

Otherwise production fell by 0.3%, construction dropped by 1.3% and agriculture decreased by 0.4%.

9.45am BST

The pound is struggling in the wake of the revised GDP figures.

Against the dollar it has slipped back from its earlier (unconvincing) gains, 0.09% down at $1.2787.

The slight improvement [in GDP from the first quarter] has done little to alter the fortunes of the pound with the currency falling to its lowest level since June against the US dollar this morning and sterling remains close to its 8 year low against the Euro (if we exclude the flash crash last October when prices were erratic).

9.41am BST

Within the GDP figures, business investment stands out.

It was flat during the quarter compared to a 0.6% rise in the first three months of the year and expectations of a 0.4% increase. In the event the outcome was the weakest since the fourth quarter of last year.

9.30am BST

BREAKING NEWS:

The UK economy grew by 0.3% in the three months to June, in line with initial estimates. This equates to annual growth of 1.7%.

9.26am BST

Spain's economy grew by 0.9% in the second quarter compared to the first, new figures have confirmed.

This is a rise from 0.8% in the first quarter and equates to annual growth of 3.1%. Geoffrey Minne at ING said:

Spanish growth is not only strong and impressive, but it also seems to be on a more sustainable footing than it was before the housing crisis. The combination of strong domestic demand and a positive contribution of external demand should lead GDP growth to top 3% for a third consecutive year. To repeat this result in 2018, several political issues will need to be resolved, notably in Catalonia.

9.23am BST

Earlier, a new report showed a rise in French business confidence, with morale in the industrial sector hitting a near ten year high.

According to statistics office INSEE, the overall confidence index rose to 109 from 108 in July with the industrial figure rising from 108 to 111, its best level since December 2007. Economist Julien Manceaux at ING Bank said:

Business climate indicators by INSEE showed another improvement for August this morning. The trend is led by manufacturing but confidence in the service sector remains very high. The main disappointing points in this release were the weaker hiring intentions shown in the service survey while future retail sales prospects declined strongly...

All in all, this week's surveys are an indication of the continuing recovery in France, especially in manufacturing. French growth - having slowed from 1.2% in 2015 to 1.1% in 2016 - is set to rebound to 1.5% in 2017. Afterwards, if the new Government can take profit from the accelerating recovery to implement reforms, GDP growth could accelerate towards 1.7% in 2018.

8.49am BST

Not expecting any revision to weak Q2 #UK #GDP but wouldn't be surprised if weak net #export performance continues https://t.co/Gt0O6y2TtD

1. UK Q2 #GDP growth out today. Lots of focus on consumers & investment, but so far it's net trade & inventories combo that's been the drag. pic.twitter.com/LvXvTZsHiM

8.42am BST

The pound is struggling to hold up, as the uncertainty over the Brexit negotiations continues to weigh on the currency.

Against the dollar - which has its own problems including Trump's threat to shut down the US government if he doesn't get funds for his Mexico wall - the pound has only managed to remain unchanged at $1.2798. Against the euro, after hitting eight year lows, it has edgd up 0.11% to a1.0851.

But the imminent GDP figures could cause further ructions. Konstantinos Anthis at ADS Securities said:

The release of the Gross Domestic Product report is being seen as a risk event for the British currency.

Analysts are expecting the second quarter figure to come in unchanged at a paltry 0.3% - a surprise revision could make a bad week for the pound worse, or help the currency lift away from its recent lows. Also worth paying attention to is the quarterly preliminary business investment figure, which is forecast to fall from 0.6% in Q1 to 0.2% in Q2 - again, not exactly the kind of news sterling wants to hear right now.

8.33am BST

It's a tentative start for European markets but they are at least heading in the right direction, despite the continuing concerns about President Trump's policies, North Korea, and some nervousness ahead of this week's Jackson Hole meeting of central bankers.

The FTSE 100 is up 0.26% (although the mid-cap FTSE 250 is down 0.3% after the 32% slump in Dixons Carphone shares).

8.16am BST

Back with the UK car production figures:

8.12am BST

Britain's car manufacturers geared up production last month ahead of the summer shutdown and a number plate change in September.

According to the Society of Motor Manufacturers and Traders (SMMT), UK car output rose by 7.8% last month after seven successive months of decline. Exports grew by 5.3%. Car production has now passed the one million mark this year, although this is down 1.6% compared to the same time last year. Mike Hawes, SMMT chief executive, said:

UK car production lines stepped up a gear in July, as usual bringing forward some production to help manage demand ahead of September and routine summer factory shutdowns. As the timing and length of these manufacturing pauses can shift each year, market performance comparisons for July and August should always be treated with caution, but as long as the economic conditions at home and abroad stay broadly stable we expect new car production to remain in line with expectations for the rest of 2017.

8.08am BST

BREAKING:

Dixons Carphone shares have plunged 22% in early trading following its profit warning.

7.54am BST

A little more detail on the Jackson Hole central bank meeting, courtesy of RBC Capital Markets:

The annual Jackson Hole Economic Symposium begins later tonight when the programme for this year's gathering will be released (at 6pm local time, 1am UK time). The main address of interest to European markets, that of ECB president Mario Draghi, has already been confirmed by the ECB for 8pm (BST) on Friday evening.

For today, there is only one ECB speaker of note, Bank of Italy Governor Ignazio Visco, who will speak later this evening.

7.48am BST

Here's our story on the Dixons Carphone profit warning:

Dixons Carphone has warned of a steep fall in profits this year, as customers hold on to their phones for longer after the weaker pound pushed up the price of new handsets.

In an unscheduled trading statement, the company said it expects profits in the range of 360 to 440m this year, down from 501m last year. Analysts had on average been forecasting a profit of 495m.

Related: Dixons Carphone warns on profits as customers keep phones for longer

7.40am BST

One share likely to do badly when trading begins is Dixons Carphone.

The electronics and phone retailer has downgraded its profit expectations for the year, blaming tougher conditions in the mobile phone market, including peoply holding on to their phones for longer.

Announcing Q1 trading and a change to forecasts today but importantly we've grown revenues, share and profitability in all core markets

The profit warning from Dixons Carphone (driven by the mobile phone business...) will go down like a lead balloon in the City today... https://t.co/olMI2rrMMa

7.36am BST

It looks like being a caution start to trading for European markets:

Our European opening calls:$FTSE 7386 up 3
$DAX 12174 down 0
$CAC 5116 up 1$IBEX 10329 down 9$MIB 21599 down 21

7.34am BST

Good morning, and welcome to our rolling coverage of the latest news from the world economy, the financial markets, the eurozone and business.

Central bankers will be gathering at the Jackson Hole mountain resort in the US later for the start a symposium to discuss the key economic issues of the day. The big events will be on Friday, with European Central Bank president Mario Draghi and US Federal Reserve chair Janet Yellen both due to speak. Markets are likely to be nervous ahead of any hints from either about their future policy, whether Draghi hints at an end to the bank's bond buying programme or Yellen suggests further rate rises are on the way.

The markets believe that the ECB is on course to begin tapering their stimulus program, and the only unknown is the timing of such measures. Whether Draghi likes it or not the ECB will have to cut back on stimulus simply because the outstanding bonds available to buy is diminishing rapidly, and the continued expansion in economic activity and factory growth points to a fairly resilient recovery in Europe.

Today's second estimate will have the benefit of slightly more data to work with, however expectations are for an unchanged reading of 0.3%, with a moderate decline in business investment to 0.2% from 0.6%.

Services once again are expected to make up the lion's share of the expansion with 0.5%, as the weak pound prompts resilience from overseas visitors in the travel and leisure sector.