UK economic growth slows to 0.5% - as it happened
Rolling coverage as Britain's growth figures miss forecasts, with manufacturing and construction both shrinking, while US data also disappoints
5.48pm GMT
With continuing concerns about China after it seemed to abandon its 7% growth target at the weekend, and nervousness as the US Federal Reserve began its latest policy meeting, shares suffered a day of losses. In the UK, commodity companies, weakened by Chinese worries, put pressure on the market while the latest GDP figures missed economists' forecasts. There was also disappointing data from the US, including consumer confidence. The final scores showed:
5.28pm GMT
Oil prices continue to slide, with Brent crude now down nearly 2% at $46.62. Jasper Lawler at CMC Markets said:
West Texas crude broke down to two-month lows as the US government signed off on a deal to sell some its strategic petroleum reserve from 2018 until 2025 ahead of an expected build in weekly API inventories data.
4.33pm GMT
There's an interesting summary of the current state of play with the Greek financial crisis, including a timeline, from Standard & Poor's. It says:
In recent months, Greece's fiscal position has significantly deteriorated, reflecting weaker economic activity, uncertainty regarding tax policy, as well as opportunistic delays on tax obligations. Under the new Financial Assistance Facility Agreement with the European Stability Mechanism, the government is currently putting into place tough measures to shore up revenues, and will move ahead with fresh expenditure cuts. We now forecast that the Greek economy will shrink by about 1% in 2015 and by an additional 2.3% next year, the latter partly reflecting an expected statistical effect (a large negative carryover from 2014). Risks to our GDP projections are substantial, however, and the margin of error is wide in both directions...
Political and economic turmoil has severely weakened Greek banks' funding positions and has hampered their capacity to access the interbank market. According to our estimates, about a30 billion of foreign funding left the country between January and February 2015. At the same time, Greek depositors started to withdraw domestic funding--we estimate that from the end of November 2014 to the end of September 2015, Greek banks lost about a50 billion of domestic deposits, amounting to 28% of Greece's GDP.
3.58pm GMT
Back in the UK, and MPs will be quizzing representatives of the steel industry, including a director from Tata Steel which last week announced 1,200 job cuts, and the government on the crisis facing the sector. The select committee hearing can be seen live here from around 16.10.
Timely, given iron and steel production was one of the fastest shrinking sectors of the UK economy, according to the latest GDP figures.
3.42pm GMT
Somewhat unusually, the poor US data has had a dampening effect on markets, said Connor Campbell at Spreadex:
Normally such dismal data would have been a big boost to the Dow, due to their rate-hike delaying capabilities. However, since it was already beyond unlikely that the Fed would choose to pull the lift-off trigger this month anyway, today's economic bad news carried more weight as, well, bad news than it traditionally has done for much of the year. Not that this was too disastrous for the Dow (which, admittedly, was helped by decent third quarter results for Pfizer and Merck).
3.15pm GMT
Over in Greece, the country plans to release a framework for recapitalising its banks by Friday, according to Reuters.
This would be a day after the European Central Bank releases results of its health check on the country's big four banks, and would allow parliament to vote it into law on Sunday.
2.14pm GMT
Guys I think an October hike may be out
2.06pm GMT
Yet more disappointing data from the US.
The US consumer confidence index has fallen from 102.6 in September to 97.6, well short of the forecast 103. Lynn Franco, director of economic indicators at the Conference Board, said:
Consumer confidence declined in October, following September's modest gain.
Consumers were less positive in their assessment of present-day conditions, in particular the job market, and were moderately less optimistic about the short-term outlook. Despite the decline, consumers still rate current conditions favorably, but they do not anticipate the economy strengthening much in the near-term.
1.55pm GMT
As the US Federal Reserve meets ahead of unveiling its latest policy decision tomorrow there is a host of weak data. This makes it even more unlikely the Fed will raise rates this month, although its statement will be scoured for any indications as to whether the bank plans to act before the end of the year.
After the disappointing durable goods figures, Markit's services sector flash PMI reading came in at 54.4 in October. This was below the consensus forecast of 55.1 and compares with a final reading of 55.1 for September.
1.44pm GMT
Our economics editor Larry Elliott explains why the UK economy is becoming more unbalanced:
Low interest rates make borrowing for consumption and speculation in financial assets cheap; the strong pound and the slowdown in the global economy make exporting UK made goods expensive and difficult. As things stand, poor quality growth is exacerbating the north-south divide and highlighting the age-old failure of Britain to pay its way in the world.
Related: George Osborne has plenty on his plate with the UK economy
1.15pm GMT
This chart from RBC Capital Markets shows that UK growth has dropped below its recent average:
1.13pm GMT
New economic data from America just proved that Britain isn't the only country whose manufacturing industry is struggling.
The durable goods numbers are only terrible if you think the US is still a manufacturing economy. In which case, is Elvis #1 this week?
12.54pm GMT
We're collecting City reaction to today's GDP data here:
Related: Slowdown in UK GDP growth: what the economists say
12.46pm GMT
Despite the manufacturing gloom, Britain is still excelling at making one thing - films.
The UK film industry grew by a rip-roaring 6% in the last quarter, according to today's data from the ONS.
12.23pm GMT
And here's another interesting, and depressing, chart from RBS:
This is the 7th recession (2 or more consecutive quarterly contractions) in UK manufacturing since 1997. pic.twitter.com/lrXspXxwwe
12.20pm GMT
The weaker-than-expected growth figures haven't provided much cheer in the City.
"The UK economy looks like it has been losing momentum, hindered by China's downturn, a construction slump and ailing manufacturers.
However, recent figures including retail sales figures, have beat expectations. Therefore, despite the market's disappointment this morning, investors should acknowledge that this level of growth is still relatively good and the weakness appears to be mainly in manufacturing which is not unexpected."
11.57am GMT
Here's another example of Britain's unbalanced recovery.
While manufacturing shrank by 0.3% in the last quarter, the business services and finance sector grew by a healthy 1%. And "real estate activities" - the buying and selling of property - made the largest positive contribution to the increase.
11.40am GMT
The UK economy is now almost entirely reliant on services for growth, says Kallum Pickering, UK economist at German bank Berenberg.
In the construction industry, firms are experiencing increased costs pressures coming from labour and materials shortages. For production: It's biggest component, manufacturing, not only suffers from weakness in global trade, but, more precisely, a lack of investment and a lack of willingness of firms to base production in the UK.
This stems from, among other things, a chronic uncertainty in the UK's future energy supplies due to lack of investment in energy capacity. Taken together, this implies that if a decline in UK services were to take place, the UK economy would be vulnerable.
10.58am GMT
TUC general secretary Frances O'Grady has rebuked George Osborne for failing to provide enough help to the manufacturing sector, and working people generally:
"We need better balanced growth that delivers secure opportunities for working families. But while the economy is still expanding, the recovery is too weak, and Britain's manufacturing industry remains in decline. What's more, the government's failure to protect our steel industry looks set to mean the loss of even more manufacturing jobs.
"We need a proper industrial strategy to ensure our manufacturing industry keeps up with the rest of the world. And the Chancellor must invest more to boost demand rather than cutting the public services and tax credits which are vital to supporting working families."
10.42am GMT
This fascinating chart from Royal Bank of Scotland shows which areas of UK manufacturing performed particularly badly in the last three months.
Top 10 worst performing sectors in Q3. Iron and steel struggling but coal mining collapses. pic.twitter.com/H7xIjCtV9s
10.40am GMT
Britain's manufacturing industry is stuck in recession, having contracted by 0.3% in the last three months and 0.5% in the second quarter of the year.
Zach Witton, deputy chief economist at EEF, the manufacturers' organisation, says that the UK metals industry has been hammered particularly hard:
"Growth was partly dragged back due to manufacturing remaining in recession.
The weakness was broad based across the sector as recent challenges have been exacerbated by the sharp contraction in iron and steel and, signs of slower demand from the consumer sector.
10.22am GMT
Britain's iron and steel-making industry suffered a torrid quarter, shrinking by 7%, according to Sky's Ed Conway:
"Basic iron & steel production" one of the fastest shrinking sectors of the economy in Q3. Down by 7% in quarter. Down 9% in past year
10.13am GMT
Alex Edwards, currency analyst at UKForex, explains why the pound fell once the UK growth figures were released:
Although the services component of the data was positive, the result will go some way to supporting arguments for the Bank of England to leave interest rates on hold for longer.
If the US Federal Reserve is also dovish in its statement tomorrow, it could raise the possibility that we won't see a UK rate hike until very late next year.
10.06am GMT
Ben Brettell, senior economist at financial services firm Hargreaves Lansdown, is worried that the UK economy is becoming more unbalanced.
The signs have been there for some time - the UK economy has been losing momentum.....
Weaker construction and manufacturing output are the primary reasons for the slowdown, which could prompt concerns that the UK economy's reliance on the services sector is increasing further.
10.04am GMT
Britain's March of the Makers has been shunted off course by the problems in developing markets, explains Jeremy Cook of foreign exchange firm World First.
"Manufacturing has been damaged in the UK by a strong pound and weakness in crucial export markets as a result of fears of a hard landing in China."
10.01am GMT
The good news is that Britain's economy has now expanded for 11 quarters in a row.
9.56am GMT
Britain's service sector is now more than 10% bigger than in 2008, before the collapse of Lehman Brothers.
But as this chart from the ONS shows, the other sectors are still lagging.
The construction and production industries were more acutely affected by the deterioration in economic conditions. Following the downturn, the services industries generally grew steadily, albeit slowly, with output exceeding its pre-downturn peak in Quarter 1 (Jan to Mar) 2012.
Production and construction activity began to grow in 2010 - with manufacturing showing particular strength - but neither industry sustained this growth.
9.48am GMT
The pound has fallen around 0.15% against the US dollar, to $1.5324.
9.43am GMT
The chancellor has tweeted about the GDP report:
GDP is 0.5%. UK continues to outperform other major economies. But global risks mean we go on with tough decisions to live within our means
9.39am GMT
Britain's service sector provided most of the growth in the last quarter:
9.36am GMT
More gloom for Osborne as growth in the economy slows to 0.5% in three months to Sept.
9.36am GMT
This is not good news for George Osborne, Britain's finance minister.
Not only has growth slowed, but there's no sign of his famous March of the Makers. The economy looks as unbalanced as ever, given the contraction in manufacturing.
Further bad news for @George_Osborne: U.K. Quarterly GDP growth drops from 0.7% in Q2 to 0.5% in Q3.
9.35am GMT
More bad news -- Britain's manufacturing sector contracted by 0.3% during the last quarter.
9.33am GMT
Britain's service sector was the fastest growing part of the UK economy in the last quarter, while the building sector suffered a sharp, and worrying, contraction.
Here's the detail:
9.30am GMT
Breaking! The UK economy grew by just 0.5% in the third quarter of 2015, down from 0.7% three months earlier.
The Office for National Statistics is releasing full details right now.....
9.29am GMT
This is your one minute warning....
9.27am GMT
Make that three economists...
@mhewson_CMC weak construction output and soft summer labour market prints mean I have 0.5%. Agree 0.6% looks a bit much...
9.22am GMT
UK Q3 GDP out in 10 mins - anyone think that 0.6% expectation is slightly optimistic? #gbp
Yes - two economists quoted in this blog already :)
9.19am GMT
Tension is building in the City, as investors wait to see whether Britain's growth slowed in the last three months....
Right UK GDP in 13 minutes. Heads UP!!!!
First look at UK GDP in Q3 due 09.30am. Est 0.6% QoQ (vs 0.7% prev) Est 2.4% YoY (unch) BoE's forecast for Q3 is 0.7% QoQ
9.17am GMT
It's worth remembering that the current recovery has been the slowest from any recession in the last 100 years.
This is particularly stark if you look at GDP per head, as the TUC did in August:
#GDP figures, due today, will give some pause for doubt over the #UK's growth #econespresso pic.twitter.com/sV4TOjQU5I
8.50am GMT
Today's growth figures may raise the spectre that Britain's economy becomes increasingly unbalanced next year.
Jeremy Cook of foreign exchange firm World First explains how service sector companies have outpaced their rivals recently:
Industrial numbers have remained weak through Q3 but consumption has remained strong, although we did see a temporary blip midway through the quarter. Exports are said to be more difficult given the strength of the pound and the weakness in crucial export markets.
As we get ready for Halloween, we think that today's number is unlikely to send market observers scurrying behind the sofa but may give new voice to concerns around the imbalances in growth moving into 2016.
World First Morning Update October 27th - UK GDP set to show slight slowing - https://t.co/FRrv01UVKa
8.37am GMT
Robert Wood, chief UK economist at Bank of America Merrill Lynch, also predicts that growth slowed to 0.5% in the last three months.
8.31am GMT
My colleague Katie Allen has rounded up the key charts that show the state of the UK economy, setting the scene for today's growth figures.
It includes this one, showing how the construction sector has struggled in recent months:
Like manufacturing, the construction sector - which accounts for about 6% of the economy - is unlikely to have contributed to overall economic growth in the third quarter.
Construction experienced sharp drops in output in July and August and it seems unlikely that September saw enough of a rebound to make up for that slow summer.
Related: GDP: UK economy in five charts
8.18am GMT
Mikael Olai Milhij of Denmark's Danske Bank, reckons that UK growth slowed to 0.5% in the last quarter, down from 0.7% in Q2.
He points out that construction and manufacturing surveys over the summer were disappointing. He predicts that construction will have knocked 0.1% off today's growth number, while manufacturing will have been flat.
Some charts on the #UK business cycle. We think growth slowed to 0.5%q/q in Q3, still service-driven https://t.co/uTsT4y9ExY $eurgbp $usdgbp
8.17am GMT
Reuters polled 59 City economists about today's GDP figures. Estimates ranged from growth of just +0.3% up to +0.8%, leading to an average prediction of +0.6%.
The City hasn't done too badly at guessing GDP recently - although it had a shocker a few years ago when the economy unexpectedly shrank by 0.5% in Q4 2010....
7.53am GMT
Good morning.
We're kicking off a busy few days for the global economy with live coverage of the latest UK growth figures.
