| Consensus | Actual | Previous | |
|---|---|---|---|
| Month over Month | 0.1% | 0.5% | -0.1% |
| 3-Months over 3-Months | 0.0% | 0.2% | 0.0% |
Highlights
The economy was a good deal stronger than thought at the end of last quarter. A 0.5 percent monthly increase in total output easily eclipsed the market consensus and was the best performance since last October. The jump lifted 3-monthly growth from 0.0 percent to 0.2 percent and annual growth from minus 0.3 percent to 0.9 percent. GDP was also 0.8 percent above its pre-Covid level in February 2020.
June's monthly gain was broad-based but led by the goods producing sector where output climbed fully 1.8 percent after a 0.6 percent fall in May. Within this, manufacturing jumped some 2.4 percent. Services advanced a more modest 0.2 percent including a 0.5 percent gain in consumer-facing industries. Elsewhere, construction grew 1.6 percent having declined 0.3 percent previously.
The June data are surprisingly robust. There may have been a boost from the extra bank holiday in mid-quarter but this is unlikely to fully explain the overshoot versus forecast. Indeed, the unexpected buoyancy will be seen by the BoE MPC's hawks as further justification for their call last week to raise Bank Rate by 50 basis points. It must also increase the chances of another hike in Bank Rate at the September MPC meeting. Indeed, at 39 and 46 respectively, the UK's ECDI and ECDI-P show overall economic activity running well ahead of market expectations.
June's monthly gain was broad-based but led by the goods producing sector where output climbed fully 1.8 percent after a 0.6 percent fall in May. Within this, manufacturing jumped some 2.4 percent. Services advanced a more modest 0.2 percent including a 0.5 percent gain in consumer-facing industries. Elsewhere, construction grew 1.6 percent having declined 0.3 percent previously.
The June data are surprisingly robust. There may have been a boost from the extra bank holiday in mid-quarter but this is unlikely to fully explain the overshoot versus forecast. Indeed, the unexpected buoyancy will be seen by the BoE MPC's hawks as further justification for their call last week to raise Bank Rate by 50 basis points. It must also increase the chances of another hike in Bank Rate at the September MPC meeting. Indeed, at 39 and 46 respectively, the UK's ECDI and ECDI-P show overall economic activity running well ahead of market expectations.
Market Consensus Before Announcement
GDP in the month of June is expected to edge 0.1 percent higher versus 0.1 percent contraction in May which compared with expectations for contraction of 0.4 percent.
Definition
Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. The monthly report is based on output data only as the income and expenditure series are not available.
Description
GDP covers all aspects of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market investors like to see healthy economic growth because robust business activity translates to higher corporate profits. GDP contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. However, the monthly report is quite limited and only provides data on the main output sectors. More detailed information is available in the quarterly reports.
