GDP on track for growth in the region of 0.2-0.3% in Q3 - EY ITEM Club comments

30 September 2016

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  • GDP growth in Q2 revised up from 0.6% to 0.7%…
  • …while strong services data in July points to a solid Q3
  • Evidence of momentum supports our above-consensus view for 2016

Martin Beck, senior economic advisor to the EY ITEM Club, comments:

“Consumers did most of the heavy lifting that supported the upward revision of GDP in Q2. More importantly, the services sector showed a 0.4% increase in output in July, a very strong outturn which should end any fears that GDP will contract in Q3.

“Our short-term model suggests that we are now on track to see GDP growth in the region of 0.2-0.3% in Q3.

“With September’s GfK consumer confidence barometer reporting a second successive improvement in sentiment, wiping out all of the post-referendum losses, the economy looks to be in much better shape than many had feared it would be as we move towards Q4. The latest data supports our above-consensus view that the economy will grow by 1.9% this year. And with activity carrying more momentum than anticipated, there is the chance of an upside surprise for 2017.”