uk gdp (q3 18 prelim) & short-term indicators prev
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The UK economy likely grew at a faster rate in the past quarter than during the one prior thanks to fair weather and football, according to economists. The Office for National Statistics (ONS) is scheduled to publish the preliminary reading for third-quarter GDP alongside the Index of services (IoS), Index of production, construction output, and trade balance data at 0930GMT, 9 November 2018. 

 

Analysts look for GDP growth to pick up to 0.6pct in Q3 2018 from the 0.4pct print in Q2 2018. If realised, this would be higher than the 0.3-0.4pct indicated by the PMI surveys. The one-off factors of a long, hot summer and the FIFA World Cup helped drive activity during the 3-months to September, according to observers. Recent PMIs seem to signal slower UK GDP growth at the beginning of Q4 2018. 

 

Last week’s Bank of England Inflation Report tweaked forecasts but didn’t really move the dial on many of its August GDP growth and inflation estimates. The near-term path of GDP was raised modestly to reflect the predicted strong Q3 growth outperformance.

 

Industrial production has benefitted from a relatively quiet maintenance period for oil and gas sites this summer, according to ONS data. This has led to a rise in North Sea production and a recovery in energy supply output. 

 

Car production in Europe has shown signs of a slump (the exception being Germany), and this could infect UK auto manufacturing and in turn the manufacturing sector as a whole. Regulatory changes that have recently hit the industry have been visible in private survey data. 

 

The BoE also noted the reluctance of business to invest in the UK until more certainty and assurance about Brexit is known. 

 

Construction has held up well of late, some of that due to base effects. Nonetheless, underlying strength is evident across the sub-sectors. Output is expected to rebound in September, from the soft August read. 

 

Trade date should show a general narrowing of the UK’s trade balance for September. Last month, the total UK trade deficit (goods and services) narrowed to GBP2.8bln from GBP4.7bln in the 3-months to August 2018.

Harry Daniels – LiveSquawk News – London Desk 

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