29 Apr 2015
UK Q1 GDP disappoints into elections, rebound in Q2? – Nomura
FXStreet (Barcelona) - According to Philip Rush, European Economist at Nomura, UK’s Q1 GDP came in below expectations, but the growth is likely to strengthen into Q2, forecasting the second quarter growth at 0.5% qoq.
Key Quotes
“Disappointing Q1 GDP growth data (0.3% q-o-q; Nomura 0.4%; Consensus 0.5%) come at a politically sensitive time with the general election less than two weeks away. This could curb upside polling potential for the Conservatives who may have had a better weekend.”
“Some volatile sector moves (construction and mining), along with the front-loaded weakness within Q1, mean growth remains likely to strengthen in Q2. Indeed, carry-over effects add about 25bp. However, problems in the finance sector may not unwind in time for Q2 strength, so we trim our Q2 GDP growth forecast by 0.1pp to 0.5% q-o-q.”
“With employment and wage growth still strong, productivity is weaker and unit wage cost pressures more inflationary. Our forecasts in these areas are increasingly looking too dovish, despite already being on the hawkish fringe of forecasters.”
Key Quotes
“Disappointing Q1 GDP growth data (0.3% q-o-q; Nomura 0.4%; Consensus 0.5%) come at a politically sensitive time with the general election less than two weeks away. This could curb upside polling potential for the Conservatives who may have had a better weekend.”
“Some volatile sector moves (construction and mining), along with the front-loaded weakness within Q1, mean growth remains likely to strengthen in Q2. Indeed, carry-over effects add about 25bp. However, problems in the finance sector may not unwind in time for Q2 strength, so we trim our Q2 GDP growth forecast by 0.1pp to 0.5% q-o-q.”
“With employment and wage growth still strong, productivity is weaker and unit wage cost pressures more inflationary. Our forecasts in these areas are increasingly looking too dovish, despite already being on the hawkish fringe of forecasters.”