Gross Domestic Product and Industrial Production - Britain managed to avoid a recession despite weakness elsewhere in the global economy. Economic growth has come from a strong and thriving services sector that has more than offset a weak manufacturing sector. One reason for manufacturing's weakness up until now has been the strong value of the pound especially against the euro and the dollar. This makes British manufactured products expensive in the eurozone, the nation's primary export market. Manufacturers have begun to show signs of life. As in the U.S., the consumer and housing have provided the backbone of growth.

Third quarter GDP growth was estimated to be 0.7 percent when compared with the previous quarter. It was up 2.7 percent on the year. The service sector continues to perform well and now the manufacturing sector is also contributing to improved growth. Industrial production had been a drag on the economy even though it only accounts for about 16 percent of the economy.

Inflation
Inflationary pressures have been vulnerable to soaring energy prices. Although the boom in housing prices has ended, upward pressures from gasoline prices and the weaker pound sterling (which increases the price of imported energy products) continue to exert upward price pressure. The PPI has been influenced by soaring input prices for raw materials such as steel and crude.

Unemployment - Two unemployment measures are used to evaluate labor market conditions. The first is the claimant unemployment rate, which has been 3 percent since March. The second is the International Labour Organisation unemployment rate, which excludes jobseekers that did any work during the month. That unemployment rate has been edging upward and is 5.6 percent. In both cases, the unemployment rate is showing signs that slower growth had spread to the labor market. Some analysts say that immigration into the UK is helping to ease tight labour conditions. Previously unemployment had fallen consistently since peaking in 1992.

Merchandise trade - Ever since statistics on exports and imports of goods were first collected in 1697 trade has been one of the country's key economic indicators. Britain's merchandise trade balance has historically been negative. Like the U.S., Britain must rely on healthy investment income from abroad and service exports to fund its appetite for imported goods. The greatest volume of trade takes place with other EU countries, thus the exchange rate between the pound sterling and the euro plays a crucial role. The weak euro has made British manufactured goods very expensive and has cut into exports to Europe, its most important trading partner.