This week we only have one major data point out, but it’s a big one – the first estimate of Q3 GDP. This is always an important release, but has added significance this time with the Bank of England’s interest rate decision just around the corner.
Q3 GDP 1st estimate
On Wednesday the ONS will release the first estimate for Q3 GDP. Last quarter the economy expanded by 0.3%, slightly up from the 0.2% seen over the opening three months of the year. While the economy has been performing steadily since, with PMI indicators generally healthy, the disappointing services output recorded in July means this figure is not expected to rise, and instead a further expansion of 0.3% is expected. But what does this mean for the Bank of England, given at one point an expansion of 0.5% was being tentatively muted..?
A 0.3% expansion (if in fact that is the case) is a slightly disappointing return. However it is still stable growth. Along with this, a host of other indicators including last week’s inflation data, which saw the CPI hit the 3% mark, as well unemployment remaining at 4.3%, means that the growing belief that the Bank will raise rates in November still holds. Whether the Bank will be swayed if the GDP data disappoints to the downside remains to be seen, what is clear however, is that economists and policy makers alike, will be following the release with bated breath.
Released today: Investment Monitor 2017/18. Stay tuned for Lee’s blog on the key highlights of our annual Monitor, in partnership with Santander.