UK Prelim. Data F'casts: Q2 GDP - Second Estimate, June IOS

By Jamie Satchithanantham

     LONDON (MNI) - UK growth is seen being confirmed as coming in modestly

higher, with nine of the ten analysts polled by MNI expecting the second

estimate of second quarter GDP to come in unchanged at 0.3% q/q.

     Despite revisions to the June industrial production (revised up from +0.1%

m/m to +0.5% m/m) and construction (revised down from +1.8% to -0.1% m/m), the

data published since the initial GDP estimate was published last month, these

are not seen to be significant enough to change the headline figures. 

     As such, the focus on Thursday will fall on the expenditure breakdown of

the GDP numbers. 

     Household consumption, the primary driver pf GDP growth and largely

responsible for the slowdown in the first half of the year. Spending grew by

only 0.3% q/q in Q1, the weakest outturn since the final quarter of 2014. It

could rebound in Q2 on account of healthier retail sales activity (sales volumes

grew 1.5% in Q2 having contracted 1.4% in Q1).      

     In addition, observers will look to see how business investment and net

trade evolved between April and June. In Q1, investment was up 0.6% q/q after

declining 0.9% q/q in 2016 Q4. Net trade, however, deteriorated over the first

three months of the year and subsequently subtracted 1.4pp from growth.   

     The Bank of England has previously said they were watching to see if these

two components would pick up the slack from softer household spending, as real

earnings continue to contract, and prevent growth from slowing further.

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

                       2017 Q2     2017 Q2

                    Second GDP  Second GDP

                      Estimate    Estimate

                          rate        rate

                         % Q/Q       % Y/Y

Date Out                24-Aug      24-Aug

Median                     0.3         1.7

Forecast High              0.3         1.7

Forecast Low               0.2         1.7

Standard Deviation         0.0         0.0

Count                       10           7

Prior                      0.2         2.0

Bayern                     0.3         N/A

Commerzbank                0.3         N/A

HSBC                       0.3         1.7

ING                        0.3         1.7

Investec                   0.3         1.7

LBBW                       0.2         N/A

Lloyds TSB                 0.3         1.7

Nomura                     0.3         1.7

Oxford Economics           0.3         1.7

RBC                        0.3         1.7

     June's services output will also be confirmed alongside the GDP numbers on

Thursday.

     Last month's preliminary estimate of second quarter GDP growth factored in

services growing 0.3% on the month in June. This is in line with the

expectations of three analysts who provided a forecast. 

     Lloyds Bank, however, did see output growth coming in at 0.2% m/m, equal to

the previous two monthly outturns. 

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

                         Jun       Jun

                          UK        UK

                    Index of  Index of

                    Services  Services

                       % M/M     % Q/Q

Date Out              24-Aug    24-Aug

Median                   0.3       0.5

Forecast High            0.3       0.5

Forecast Low             0.2       0.5

Standard Deviation       0.1       0.0

Count                      3         3

Prior                    0.2       0.4

HSBC                     0.3       0.5

Lloyds TSB               0.2       0.5

Oxford Economics         0.3       0.5

     This survey will be updated Monday August 21.

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

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