RBS forecasting 0.5 pct growth for UK economy in Q2 2013
RBS have released their preliminary GDP Tracker stats for the UK for Q2 2013, and it is signalling quarterly growth of 0.5 pct.
Ross Walker, RBS European Economics, says:
"A combination of favourable base effects (in industrial production but also, to a lesser extent, construction) alongside a marked rebound in a number of key surveys (notably the services PMI) underpin our 0.5% Tracker estimate.
"At this stage the Q2 Tracker estimate is heavily dependent on survey inputs and the risks are that subsequent ONS data will result in it being scaled back. Still, the breadth and depth of the improvement in the high-frequency data and surveys in Q2 leaves us more confident that, at the very least, the 0.3% pace of expansion in Q1 will be maintained."
"Industrial production rose 0.1% m/m in April, a somewhat indifferent monthly pace of expansion. However, the pertinent point is that favourable base effects mean industrial output is on track to expand by around 1% q/q in Q2 (which would be the fastest quarterly expansion since Q2 2010).
"The underlying picture is not quite as resilient, with manufacturing output falling 0.2% in April, but manufacturing should still see quarterly growth of around 0.7% in Q2 – survey data show a pick-up in orders and production alongside an ongoing run-down in inventories.
"Services output data for April are not released until 28 June, so our Tracker estimates are heavily dependent on survey data, which have tended to show a solid improvement – especially the services PMI (which hit a 14-month high, returning it to its long-run average, in May) but also the BoE Agents' Scores (which broadly maintained the improvement seen in the early part of 2013) and the BCC survey (where service sector confidence about turnover stands at a 5-year high).
"There are pockets of weakness, notably in retail sales and wholesale services activity, but these categories have relatively modest weights. The monthly public finances data and the government's spending plans are consistent with modest ongoing growth in public services.
"Construction output has played havoc with GDP forecasts in recent years. The PMI and BoE Agents' Scores have shown a modest underlying improvement recently – though neither correlates particularly well with the ONS data. Base effects suggest some modest upside in Q2 but this component could be subject to extensive revisions.
"GDP Tracker: +0.5% in Q2. The surveys may be exaggerating the pick-up in GDP and the UK will not be able to buck any deteriorating global trend. But, in the near-term, the UK GDP data are likely to show a clear improvement – probably an acceleration in Q2."