A consumer spending surge helped to drive growth at the start of the last quarter, but it is likely to have faded by the end.
As Marc Ostwald of ADM Investor Services puts it:
The story for the UK economy in Q3 was a strong start which had fizzled out almost completely by the end of the quarter, indeed monthly GDP and the Index of Services for September are seen at just 0.1% m/m after flat readings in August.
Q3 Business Investment is projected to rebound modestly to 0.2% q/q, which would be an improvement on Q2’s -0.7% q/q, but is obviously heavily encumbered by Brexit related uncertainties
But we’ll always have the memories. And this morning, we discover just how well the economy performed in July-September – and whether Brexit uncertainty and global trade conflicts took the shine off the sizzling summer.
New UK GDP data is expected to show Britain’s economy expanded at its fastest rate in almost two years over the summer, with growth of around 0.6%.
That would be much better than the measly 0.1% growth recorded in Q1, or the 0.4% in Q2.
To be honest, it would be a surprise if today’s GDP reading wasn’t good. Under the UK’s new monthly GDP reporting system, we already know that July was strong (with growth of 0.6% in that month alone).
August seems to have been flat, but growth probably picked up a little in September.
Royal Bank of Canada predict that household spending and building activity boosted growth over the summer:
The good summer weather boosted consumer spending and construction activity.
This first release of quarterly GDP now comes with an expenditure breakdown which we expect to show household consumption and investment being the major contributors to third quarter growth.
Amid a blizzard of data at 9.30am, we’ll also learn how well Britain’s factories and service sector firms and exporters fared in September.
But a strong performance won’t fix all Britain’s economic challenges. The City fears that growth is slowing in the current quarter, as firms slash investment plans ahead of Brexit.
Yesterday the European Commission predicted Britain would tumble to the bottom of the European growth league next year, even after a soft departure from the EU.
9.30am GMT: UK GDP for the third quarter of 2018
9.30am GMT: UK trade balance for September
9.30am GMT: UK industrial production for September