EY ITEM Club comment - GDP growth in Q3 revised up to 0.6%
23 December 2016
- GDP growth in Q3 revised up to 0.6%
- …with a solid outturn likely in the last three months of the year
- But weakness in household incomes points to a more difficult 2017
Martin Beck, senior economic advisor to the EY ITEM Club, comments:
“Q3's Quarterly National Accounts brought some unexpected pre-Christmas cheer with Q3 GDP growth revised up from 0.5% to 0.6%.
“Consumer spending remained the key driver of growth in Q3, but the first cut of the income data raised further question marks about how long this can continue. Real household income dropped sharply in Q3, taking the annual growth rate to just 0.3%, the weakest outturn for two years. With high inflation set to weigh further on spending power next year, the consumer is surely set to falter soon.
“But while we expect the pace of GDP growth to slow through 2017, it appears set to see another solid outturn for Q4 2016. A strong outturn for services output in October, combined with upward revisions to previous months, leaves the economy on course to see GDP growth of around 0.5% in Q4.”