MNI 5 Things: UK Q1 GDP Unlikely to See 1st Estimate Revision

     LONDON (MNI) - Friday sees the UK's second estimate for the first quarter

of 2018's GDP figures. Below are five pieces of analysis for consideration

before this release.

     Table 1: MNI Median Analyst Estimates

                                       Q4

                                    Prior  1st Estimate  MNI Median 2nd Estimate

--------------------------------------------------------------------------------

2018 Q1 GDP Second Estimate

(Q/Q%)                                0.4           0.1                      0.1

     1) MNI Median Points Heavily to Unchanged Figure: 

     Adding more clarity to the median estimate, a poll of sixteen analysts

showed that fifteen believe the q/q growth rate first estimated at 0.1% for

Q12018 is unlikely to be changed. The one dissent was for a slight revision

upwards to 0.2%. It is worth noting such a revision has only happened once in Q1

since 2006 and that was in 2010.

     2) Second Estimates do not have track record of being revised: 

     Previous analysis by MNI ahead of the first estimate of GDP showed the

first estimate tends to be revised in the third estimates and the estimate 3

years after the first estimate of GDP. The second Q1 estimate does not tend to

be revised with it only happening 3 out of the last 12 times since 2006.

     3) Data Since First Estimate Fails to Support Revision: 

     The 1st estimate of GDP is done so with only 40% known data and 60%

approximated. Since the estimate, construction, industrial production and retail

sales have been released, providing more colour for the 2nd estimate. Whilst

construction was revised upwards , this was offset by a fall in Industrial

Production. Retail sales was revised slightly by 0.1 percentage points. However,

when all of these factors are put together, they do not impact the initial

estimates of GDP.

     4) Services has the Power to Reshape GDP: 

     The Index of Services for February and March was not known at the time of

the first estimate. January's actual and February's forecasted m/m growth of

0.1% and -0.2% respectively were unchanged in February's data, suggesting

services could only facilitate a GPD revision with either a strong revision

either way with January and February values or March under or over shooting

forecasted m/m growth of 0.1%.

     5) Household Spending likely to fall off strong base and weak retail sales:

     Q4 2017 saw strong growth in household expenditure with q/q growth of 0.9%.

However, after falling sharply in Q2 2017, the growth in Q3 and Q4 of 2017

albeit strong, was not enough to bring the q/q growth rate back to the Q1 level.

Given the weak data from retail sales and VISA spending, it is unlikely

household spending will continue its recent strength and if anything could see a

fall.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

[TOPICS: MABDS$,MABPR$,M$B$$$,M$E$$$]