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UK Activity Data Due at 7:00 BST

UK DATA
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  • UK activity data, including the monthly GDP and its components for May, is due for release at 7:00BST.
  • Looking at the monthly GDP print, the Bloomberg median is +0.2% M/M for May with most estimates ranging from flat to +0.3%, following April's flat reading of 0.0% M/M and March's +0.4% M/M.
  • The three main subcomponents are all expected to rise after the improvement in weather in May relative to April:
    • Consensus looks for Services to increase 0.2% M/M, with most analyst estimates ranging from 0.1% to 0.3%. Given ONS UK Retail Sales Volume rebounded higher following a wet April, making it the highest since January 2024, this is likely to contribute to services rising in May.
    • Industrial Production is also forecast to rise 0.3% M/M, with most analyst estimates ranging from -0.1% to 0.6%. Manufacturing is expected to increase 0.4%M/M.
    • Meanwhile, construction output is expected to increase 0.7% M/M after last months 1.4% M/M contraction.
  • In terms of market reaction we expect a relatively muted reaction. Today's data is unlikely to be the catalyst for any MPC member to decide whether to change their vote at the August MPC meeting (unlike CPI and Labour Market data which are both due for release next week). After Pill's speech yesterday, markets are pricing around a 50% probability of an August cut (down from around 60% pre-speech).
  • Note that the Bank of England had originally been looking for 0.2%Q/Q growth in Q2 (in its May MPR) after the strong 0.6% in Q1, but it increased its Q2 growth forecast to 0.5%Q/Q at its June meeting noting that April GDP was stronger than expected (at flat) as it had previously been expecting a greater unwind of the Q1 strength.
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  • UK activity data, including the monthly GDP and its components for May, is due for release at 7:00BST.
  • Looking at the monthly GDP print, the Bloomberg median is +0.2% M/M for May with most estimates ranging from flat to +0.3%, following April's flat reading of 0.0% M/M and March's +0.4% M/M.
  • The three main subcomponents are all expected to rise after the improvement in weather in May relative to April:
    • Consensus looks for Services to increase 0.2% M/M, with most analyst estimates ranging from 0.1% to 0.3%. Given ONS UK Retail Sales Volume rebounded higher following a wet April, making it the highest since January 2024, this is likely to contribute to services rising in May.
    • Industrial Production is also forecast to rise 0.3% M/M, with most analyst estimates ranging from -0.1% to 0.6%. Manufacturing is expected to increase 0.4%M/M.
    • Meanwhile, construction output is expected to increase 0.7% M/M after last months 1.4% M/M contraction.
  • In terms of market reaction we expect a relatively muted reaction. Today's data is unlikely to be the catalyst for any MPC member to decide whether to change their vote at the August MPC meeting (unlike CPI and Labour Market data which are both due for release next week). After Pill's speech yesterday, markets are pricing around a 50% probability of an August cut (down from around 60% pre-speech).
  • Note that the Bank of England had originally been looking for 0.2%Q/Q growth in Q2 (in its May MPR) after the strong 0.6% in Q1, but it increased its Q2 growth forecast to 0.5%Q/Q at its June meeting noting that April GDP was stronger than expected (at flat) as it had previously been expecting a greater unwind of the Q1 strength.