UK economy likely to post 0.6% qoq growth in Q2

UK GDP data is scheduled to release today. The eoconomy is expected to post higher growth rate than previous period.

The first estimate of GDP growth is an output measure. The weakness of growth in Q1 of only 0.4% qoq was mainly caused by the surprise fall in services output growth from 0.9% qoq in Q4 14 to only 0.4% in Q1 15. Looking at Q1 in more detail we find that the culprit was a fall in services output in January. Growth in February and March was respectable but the weak start to the quarter dragged down the quarterly total. With the business surveys suggesting that services continued to grow throughout Q2, quarterly services should have rebounded to around 0.6% qoq in that quarter, notes Societe Generale. Construction output, whilst a relatively small  part of the economy, still looks weak. 

The published data show output falling in both April and May and if output is flat in June, then for the quarter as a whole it would have fallen by 0.7% qoq afterdropping by 0.2% in Q1. 

"Despite the recent falls in manufacturing output, we expect overall industrial production to have risen by a little over 1% in the quarter because of stronger energy output. Together, these three components of output (services, construction and industrial production), should have led to a rebound in GDP in Q2 of 0.6% qoq", says Societe Generale.