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GDP data better than expected, but details are disappointing

UK DATA
  • UK data better than expected (monthly GDP +0.5%M/M vs consensus expectation of +0.1%) with manufacturing and construction particularly strong. Services also stronger than expected -but this was partly driven by "human health and social work" growing 2.1% - due to a rise in GP appointments.
  • Obviously a bit of a strange one with the GP appointments helping services growth - GDP helped higher because more people are sick... That doesn't seem like the best dynamic!
  • Looking at services growth more widely "Output in consumer-facing services fell by 0.1% in May 2022, driven by a 0.5% fall in retail trade, and non-consumer facing services grew by 0.5% in May, following a fall of 0.8% in April." - ONS
  • In terms of market reaction, there was a small knee-jerk positive reaction for GBP vs both USD and EUR, but these moves have largely been fully retraced. In terms of what this means when STIR markets open, it's still a positive compared to what sell-side economists were thinking, but the market's pricing of 125bp more hikes by November is unlikely to see much upside pressure from today's data.
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