U.K. GDP grows above expectations sequentially in July, subsectors growth likely to ease in coming months

The monthly U.K. GDP figures came in above expectations in July. On a sequential basis, output rose 0.3 percent, following a rise of just 0.1 percent sequentially in July. On a three-month basis, growth reached 0.6 percent three-month-on-three month, the most solid pace in nearly one year and a sharp rebound from the flat beginning to the second quarter.

Services sector accounted for three quarters of the three-month rise, and in that, wholesale trade and retail rose 1.6 percent three-month-on-three month and 2.1 percent, respectively, were the main contributors. Nevertheless, with especially fine weather and the FIFA World Cup having given temporary boosts, growth in these sub-sectors are expected to ease considerably in the months ahead, noted Daiwa Capital Market Research in a report.

Professional services also seem noteworthy: a monthly rise of 1.5 percent sequentially accounted for almost half of the total rise in services activity. With architectural and engineering activities indicating a particularly steep increase of almost 4.5 percent sequentially, this tallied with rebounded momentum in construction, which indicated decent growth.

In that sector, output rose 0.5 percent sequentially, rising for the third straight month after four monthly drops at the beginning of the year. On a three-month basis, construction growth rose 3.3 percent, one of the strongest rates on the series.

Meanwhile, U.K.’s industrial production data came in below expectations. Industrial production grew just 0.1 percent sequentially to leave output down 0.5 percent three-month-on-three month. This is in spite of a 5 percent rise in oil and gas extraction, which represented positive payback after losses in maintenance in May and June.

Manufacturing output fell 0.2 percent sequentially, with losses concentrated principally in pharmaceutical production, which fell 7.5 percent sequentially, while most other sub-sectors saw a rebound in output on the month. However, manufacturing output came in flat on a three-month-on-three-month basis, a rebound from the 0.8 percent fall in the second quarter but soft nonetheless.

At 17:00 GMT the FxWirePro's Hourly Strength Index of British Pound was neutral at 150.087, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 4.45701. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex