GDP figures point to economy carrying little momentum into Q2 - EY ITEM Club comments

28 April 2017

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  • Growth in Q1 comes in at a surprisingly weak 0.3%
  • With softness broad-based 
  • Monthly data does not paint a positive picture for Q2

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

Quarterly GDP growth slowed to just 0.3% in Q1 2017, the weakest pace for a year. The monthly output data already available had indicated that quarterly growth would be in the 0.4-0.5% range, but downward revisions to those figures and the ONS pencilling in some very soft figures for March caused the weaker outturn.

“Across the sectors, the weakness was broad-based. The services sector recorded its softest outturn for two years, as high inflation squeezed consumer-facing sub-sectors. And hopes that the weaker pound would stimulate industrial production were disappointed, after the data at the turn of the year had initially shown some promise. Q1 growth was just half the pace that the Bank of England expected, reinforcing the likelihood of a lengthy period of monetary policy inaction.

“The GDP data also contained some important pointers for Q2. The March estimates were lower than the Q1 average for production and construction, and only marginally higher for services, indicating that the economy carried little momentum into Q2.” 

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