MNI ANALYSIS: BOE Unlikely To See Q2 GDP Preliminary Estimate

--Unless Specific Request, BOE No Early Look At August MPC

--ONS initiate GDP reporting switch from July  

     LONDON (MNI) - The Bank of England will be able to see the Office of

National Statistics' Q2 preliminary growth data ahead of the August policy

decision meeting, but only if it makes a specific request, citing public

interest. If no such request is made, Monetary Policy Committee will not have to

hand the data at the meet, the next likely possibility for a rate hike after

opting to hold fire in May.

     Although regular pre-release access to the data has been ended, the Bank

can ask for data in exceptional circumstances where they would need to act or

make a decision in the public interest on the basis of the statistics, the ONS

say. This was the case in advance of the May monetary policy meet when the Bank

requested pre-release access to the ONS's Blue Book articles.

     On July 10 the Office of National Statistics (ONS) will mark the beginning

of its new reporting method for GDP, switching to a rolling month basis from the

current calendar quarter basis. The data delivered on July 10 will cover GDP

growth over the three months to May. 

     The switch has been in the works since early 2016 when the ONS began

releasing data on a theme day basis. One of these such days was a 'short-term

economic indicators' theme day, published around the 10th of every month.

Currently, this includes UK industrial production, construction and trade but

absent services (roughly 80% of UK output) which is published two weeks later,

alongside the GDP data. 

     In early 2017 the ONS felt it could move the release of the services

figures alongside the other short-term economic indicators without compromising

the data, in doing so creating a new measure of GDP.

     Currently, GDP is reported in three stages - a preliminary calendar quarter

estimate four weeks after the respective quarter-end, a second estimate at the

eight-week mark and a final estimate 13 weeks out. The new system produces only

two calendar quarter estimates and a rolling monthly 3m/3m figure. 

     The clear advantage the incoming system bares is that the first estimate

will have three full month's worth of data, as opposed to the two full months

and a forecast month as used under the current system. The quality of the data

will be further enhanced by that it will include shades of all the measures of

GDP -- output, expenditure and income -- as opposed to the current preliminary

estimate which is on the least comprehensive, output basis only. 

     The clear snag, however, is that this estimate will be less timely, delayed

by two weeks, with some market spectators clocking on to the fact the MPC

therefore won't have access to the early Q2 estimate at its August meet.    

     Instead, they will have the complete monthly growth rates for April and May

and a figure for the three months to May.  

     Speaking exclusively to MNI Market News, James Scruton, Head of Preliminary

GDP at the ONS, said the change would be for the better.  

     "The trade-offs are that we get a slightly less timely first estimate of

quarterly GDP and less data content in some of the components of GDP in the

first quarterly estimate. Overall, however, the first estimate of quarterly GDP

will be of far higher quality and our second estimate will be no different to

our current third estimate, both in terms of timing and data content," said

Scruton. 

     Internationally, the move sees the ONS move away from the way GDP is

reported in the U.S. and Europe and more towards how it is reported in Canada

but Scruton said the UK would remain one of the quickest to publish its GDP

data.  

     "It's worth noting that, although our new first estimate is slightly less

timely, we're still one of the very quickest in the G7 to produce estimates of

GDP," said Scruton. 

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

--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com

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