U.K. economic growth likely to have stayed resilient in Q4 2016

The U.K. economic growth is expected to have stayed resilient in the fourth quarter of 2016. The scenario of post-referendum strength appears set to continue in the initial estimate of the fourth quarter GDP growth. The nation’s industrial production rebounded 2 percent sequentially in November, driven by huge gains in energy and manufacturing output, after a decline of 1.2 percent in October.

Even with an anticipated further moderate rise in December, that will keep the industrial production flat in the quarter. The construction sector is expected to have come in weaker, however. Output dropped in November as well as in October.

If the output has remained flat in December, then it is expected to have dropped 0.5 percent for the fourth quarter as a whole. So it comes down to the services sector as usual. While it is the biggest of the three sectors, it is also the one with the least timely data. Growth in a key part of it slowed to 1.2 percent quarter-on-quarter that implies a minor cooling in overall services output from the 0.7 percent sequential growth recorded in the third quarter.

“We expect GDP growth to have softened slightly from 0.6 percent qoq in 3Q to 0.5 percent qoq in 4Q”, added Societe Generale.

But there is a slight risk that services output growth matched the one recorded in the third quarter that might result in GDP growth staying at 0.6 percent.