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UK GDP growth plummets to 0.5% in 3Q15, below consensus expectations – ING

FXStreet (Delhi) – James Knightley, Research Analyst at ING, notes that the UK 3Q15 GDP rose 0.5%QoQ versus 0.7% growth in 2Q15 which leaves the annual rate of growth at 2.3%YoY.

Key Quotes

“While it was weaker than the 0.6% consensus expectation, it was in line with our own forecast, which was based on the deterioration in business surveys such as the purchasing managers’ index. The UK also had the effects of sterling strength, a troubling external environment with China at the forefront and a pretty damp summer, that led to disappointing retail sales growth in August.”

“At this stage we only get the industry breakdown, which showed services output rising 0.7%QoQ while construction fell 2.2% and manufacturing was down 0.3%. We will get the expenditure breakdown in a month’s time.”

“We expect a better growth number in 4Q15. The economy is creating jobs again in significant numbers, wages are rising nearly 3% in real terms and consumer confidence is at high levels. This suggests that the domestic growth story looks good. Inflation is also set to start rising as the falls in commodity prices seen late last year drop out of the annual comparison and rising domestic costs (most obviously wage costs) are increasingly passed onto the end consumer. Consequently, we continue to look for a rate rise in 2Q16 – after the Federal Reserve, but well ahead of market expectations of late 2016/early 2017.”

NZD/USD has been sidelined

NZD/USD has been sidelined
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