Following last week’s bumper crop (of largely positive) data release, new statistics are fewer in number this week – as is typically the case towards the end of the month. The main event is the expenditure components of GDP – out on Friday – which includes first estimates for business investment in the three months to June.
Recap on last week’s releases
The first estimate of GDP showed the economy expanding by 0.6% in the three months to June, with manufacturing contributing around a third of that (1.8% quarter on quarter growth), services growth slowing slightly to 0.5% (from 0.6% in 2016q1) and construction output falling – for the second quarter running – by 0.4%.
We don’t expect any movement in the headline GDP growth rate in the latest estimates on Friday.
We will be looking out for the investment data to see how this was faring pre-referendum. The provisional data will provide information on investment across the whole economy, but (unfortunately for us manufacturing-obsessed economists) we’ll have to wait another month for a sector breakdown.
Business investment fell in the previous two quarters by 2.2% (15q4) and 0.6% (16q1), the weakness at the end of 2015 was fairly broad-based across sectors, but construction seemed to be one of the larger contributors to the contraction at the start of 2016. In addition, investment intentions from our Manufacturing Outlook survey point to manufacturing doing little to prop up business investment in the latest data. However, other sectors are expected to gain some ground and we expected a positive business investment figure for q2 – albeit a fairly small one. This would be consistent with the absence of any signs of referendum wobbles in other data. Whether that changes, post-referendum, is another question….