This week is allll about the data…here’s our preview
July GDP release
We’ll kick things off with the main highlight – July’s GDP data. As we outlined here, in the summer the ONS altered its GDP calendar, dropping its usual preliminary release in favour of a monthly indicator, and a rolling three-month figure. Today we will get data for the month of July, giving us our first indication of what we may expect for the third quarter as a whole.
We are reasonably hopeful for a, if not blockbusting reading, solid data point for July. Indeed the UK economy following the weak start to the year (much to do with weather related disruption) picked up in q2, expanding by 0.4%. This growth was driven by the services sector and revival in construction activity. We expect that growth this time will again come from these sectors, given that momentum in manufacturing has eased back somewhat (see below).
Today we will also find out how the manufacturing sector performed in July. Manufacturing, thanks to three consecutive monthly contractions across February to April, finds itself in a technical recession. There is a reasonable chance the small contraction in q1 (0.1%) could be revised away, but the poor performance in q2 points to an easing in momentum in the sector from the heights of 2017. This is further illustrated by moderating PMI readings. Nevertheless we expect to see some bounce back over the second half of the year and this should start with a positive reading for July.
And if that wasn’t enough, today we get trade data relating to July. The goods deficit improved last time round thanks to an over 4% increase in exports. With the lower level of sterling likely to still be providing support, as well as our export balance from Manufacturing Outlook performing well, we are hopeful for another strong month.
This week’s data deluge is rounded off on Tuesday with the labour market statistics. This labour market continues to perform well with the unemployment rate dropping to a fresh low of 4% in June. However, as has been the case for over a year, this has not translated into a significant acceleration in wages. Indeed three month regular pay growth actually eased back from 2.8% to 2.7% in June. We have little reason to believe a notable pick-up is on the cards when the data is released tomorrow.