25 May 2015
Upside risks to UK Q1 GDP second estimate – Nomura
FXStreet (Barcelona) - Philip Rush, European Economist at Nomura previews the UK Q1 GDP release ahead, expecting the 0.3% qoq headline number to be kept unrevised, but warns of upside risks.
Key Quotes
“In the ONS’s second estimate of Q1 GDP growth, we expect the headline pace to be unrevised from 0.3% q-o-q, but see upside risks.”
“Monthly IP growth was 0.2pp stronger than had been pencilled into the ONS’s first estimate. More significantly, construction output data were 0.5pp stronger, following the incorporation of late data for January and February. On their own, revisions in these two sectors are not enough to cause GDP growth to be revised up, but if it is reciprocated in parts of the services sector it likely would be. And the surprising weakness in business services based on only 37% of the total data content might look different with the 80% data content in this one. The surge in clothing retail sales is also supportive of output in the distributive trades sectors.”
“If no headline GDP revision is delivered, the main news would likely be in the expenditure breakdown. We expect that to show domestic final sales driving growth, with net trade weighing as it unwinds some of its Q4 support.”
Key Quotes
“In the ONS’s second estimate of Q1 GDP growth, we expect the headline pace to be unrevised from 0.3% q-o-q, but see upside risks.”
“Monthly IP growth was 0.2pp stronger than had been pencilled into the ONS’s first estimate. More significantly, construction output data were 0.5pp stronger, following the incorporation of late data for January and February. On their own, revisions in these two sectors are not enough to cause GDP growth to be revised up, but if it is reciprocated in parts of the services sector it likely would be. And the surprising weakness in business services based on only 37% of the total data content might look different with the 80% data content in this one. The surge in clothing retail sales is also supportive of output in the distributive trades sectors.”
“If no headline GDP revision is delivered, the main news would likely be in the expenditure breakdown. We expect that to show domestic final sales driving growth, with net trade weighing as it unwinds some of its Q4 support.”