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Free AccessMNI DATA SURVEY: UK Q3 GDP, Q3 Current Account, Oct IOS
By Jamie Satchithanantham
LONDON (MNI) - Third quarter GDP is expected to be confirmed at 0.4% q/q,
1.5% y/y (see table below) on Friday but as we approach the end of the year,
data for Q3 is arguably of little relevance in terms of painting the most
up-to-date picture of the UK economy.
Absent any major revisions to the Q3 numbers, the Index of Services October
figures, published alongside the GDP numbers, will garner more attention as they
will provide the best indication of how growth fared Oct-Dec.
Services accounts for just under 80% of total UK output with the remaining
20% attributed to production and construction. The Index of Production was flat
on the month in October(though that came after very strong performances in prior
months) while the construction sector has continued to be the worst affected
since the Brexit vote after output fell for a second straight month by a hefty
1.5% m/m.
Soft data surveys show the service sector expanding but at a slowing pace.
After rising to a 6-month higher of 55.6 in October the CIPS/IHS Markit Services
PMI edged down to 53.8 a month later. Considering this, analysts judged that
services output likely grew a steady 0.2% on the month in October, after a 0.1%
rise in September.
All-in-all, it points to fourth quarter GDP growth somewhere between 0.3%
q/q and 0.4% q/q. This is in line with the BOE MPC's thinking though they see
downside risks tipping the balance. Minutes from the December monetary policy
meeting said they saw Q4 growth coming in "softer" than the Q3 0.4% q/q result.
---------------------------------------------------------------
2017 Q3 2017 Q3 Oct Oct
Final GDP Final GDP UK UK
Estimate Estimate Index of Index of
rate rate Services Services
% Q/Q % Y/Y % M/M % Q/Q
Date Out 22-Dec 22-Dec 22-Dec 22-Dec
Median 0.4 1.5 0.2 0.3
Forecast High 0.4 1.5 0.2 0.4
Forecast Low 0.1 1.5 0.1 0.3
Standard Deviation 0.1 0.0 0.1 0.0
Count 16 12 7 5
Prior 0.4 1.5 0.1 0.4
Bayern 0.4 N/A N/A N/A
Barclays 0.1 1.5 N/A N/A
Capital Economics 0.4 1.5 0.2 0.3
Credit Suisse 0.4 1.5 N/A N/A
Commerzbank 0.4 N/A N/A N/A
Daiwa Capital Markets 0.4 1.5 N/A N/A
HSBC 0.4 1.5 0.1 0.3
Investec 0.4 1.5 N/A N/A
JP Morgan 0.4 1.5 0.1 N/A
Lloyds TSB 0.4 1.5 0.2 0.3
Natixis 0.4 1.5 N/A 0.4
Oxford Economics 0.4 1.5 0.2 0.3
Pantheon 0.4 N/A 0.1 N/A
Scotia 0.4 1.5 0.2 N/A
Standard Chartered 0.4 N/A N/A N/A
Societe Generale 0.4 1.5 N/A N/A
A deterioration of net investment flows in 2016 meant that the current
account deficit accounted for nearly 7% of GDP. The deficit has narrowed since
then and in Q2 2017 accounted for roughly 4.6% of GDP (or stg23.2bn).
Although it remained elevated this downward trend should have continued
into Q3 and should show up in the next update also due Friday.
The weaker pound should have continued to boost net trade (though probably
by not has much as one would have hoped) while stronger overseas demand will
also have likely improved the net trade balance too. More crucially, net
investment flows will show an improvement.
In 2016 investment outflows to overseas investors were healthy, owing
largely to the then more robust UK economy and the resulting higher dividends
and profits. Inflows, on the other hand, were weaker as growth among the UK's
primary trading partners (particularly the Eurozone) lagged behind somewhat.
Now that situation has reversed. UK economic growth has slowed, amid the
friction generated by the ambiguity surrounding UK's future trading arrangements
and its materially poorer consumers, while that of the EU and other economies
has flourished. Alongside a increase in oil prices, which will boost profits of
UK investments in overseas commodities, the deficit will likely narrow again.
Taking the median of analysts responses in an MNI survey, a further stg2bn
improvement could materialise which would take the current account deficit to
stg21bn.
Also worthy of attention in Friday's release will be the latest update on
the UK household savings ratio, which stood at 5.9% in Q2.
---------------------------
2017 Q3
Current
Account
stg bn
Date Out 22-Dec
Median -21.0
Forecast High -18.9
Forecast Low -25.5
Standard Deviation 2.4
Count 7
Prior -23.2
Capital Economics -21.8
HSBC -25.5
Investec -18.9
Lloyds TSB -20.9
Pantheon -21.0
Standard Chartered -25.0
Societe Generale -21.0
--MNI London Bureau; +44 203-586-2226; email: jamie.satchithanantham@marketnews.com
[TOPICS: MTABLE,MABDT$,M$B$$$,M$E$$$]
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.