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31 Mar 2015
UK Q4 GDP revised up but services output slides in January – RBS
FXStreet (Barcelona) - Reviewing today’s data releases in the UK, Ross Walker, Senior UK Economist at RBS, comments that Q4 GDP was revised up unexpectedly to 0.6% q/q from 0.5%, but January services output weakened unexpectedly, seeing first monthly fall since March 2013.
Key Quotes
“The Q4 GDP data revisions are marginal. On the output side, industrial production was nudged up to 0.2% q/q from 0.1% on the second estimate, while services output was raised slightly to 0.9% q/q from 0.8%.”
“So, broad-based but small upward revisions, which do not meaningfully alter the view of the UK economy.”
“Still, every silver-lining contains a cloud and the surprisingly weak services output outturn in January (-0.2% m/m vs forecasts for growth of 0.3%) is a little perturbing. The main weakness was in the ‘business services & finance’ sub-category (-0.6% m/m).”
“These data may yet be revised, but with early official IP and construction output data for Q1 looking a little lacklustre (our GDP Tracker suggests a flat IP outturn and a fall in construction output of 0.6% q/q in Q1) the risks are skewed towards a moderation in GDP growth in Q1 to 0.5% q/q (below the MPC’s expectation of 0.6%).”
“The UK current account deficit narrowed in Q4, but by less than expected. The deficit towers at £25.3bn in Q4, down from £27.7bn in Q3 and vs City forecasts at £22.0bn, but this still equates to 5.6% of GDP.”
Key Quotes
“The Q4 GDP data revisions are marginal. On the output side, industrial production was nudged up to 0.2% q/q from 0.1% on the second estimate, while services output was raised slightly to 0.9% q/q from 0.8%.”
“So, broad-based but small upward revisions, which do not meaningfully alter the view of the UK economy.”
“Still, every silver-lining contains a cloud and the surprisingly weak services output outturn in January (-0.2% m/m vs forecasts for growth of 0.3%) is a little perturbing. The main weakness was in the ‘business services & finance’ sub-category (-0.6% m/m).”
“These data may yet be revised, but with early official IP and construction output data for Q1 looking a little lacklustre (our GDP Tracker suggests a flat IP outturn and a fall in construction output of 0.6% q/q in Q1) the risks are skewed towards a moderation in GDP growth in Q1 to 0.5% q/q (below the MPC’s expectation of 0.6%).”
“The UK current account deficit narrowed in Q4, but by less than expected. The deficit towers at £25.3bn in Q4, down from £27.7bn in Q3 and vs City forecasts at £22.0bn, but this still equates to 5.6% of GDP.”