| Consensus | Actual | Previous | |
|---|---|---|---|
| Month over Month | -0.2% | -0.5% | 0.5% |
| 3-Months over 3-Months | 0.2% | 0.2% | 0.2% |
Highlights
The economy was much weaker than expected in July. A 0.5 percent monthly decline in GDP was double the market consensus, fully reversed June's unrevised gain and matched the worst performance since September 2022. The fall left 3-monthly growth flat at 0.2 percent but annual growth slumped from minus 0.9 percent to 0.0 percent. Following earlier revisions, GDP was 0.3 percent above its pre-Covid level in February 2020.
July's monthly setback reflected broad-based losses amongst the main sectors. Services matched the headline drop to record its steepest fall since so far in 2023 while goods production was down an even sharper 0.7 percent. Within the latter, manufacturing output decreased 0.8 percent. Output in consumer-facing services was unchanged while construction dropped 0.5 percent.
Total output in July was 0.2 percent below its average level in the second quarter so August/September will need a rebound if the third quarter is not to register a contraction. Today's surprisingly soft update exacerbates the BoE's policy dilemma and leaves the outcome of next week's MPC meeting all the more clouded. That said, economic activity as a whole is still running slightly ahead of market expectations - the UK RPI now stands at 9 and the RPI-P at 19.
July's monthly setback reflected broad-based losses amongst the main sectors. Services matched the headline drop to record its steepest fall since so far in 2023 while goods production was down an even sharper 0.7 percent. Within the latter, manufacturing output decreased 0.8 percent. Output in consumer-facing services was unchanged while construction dropped 0.5 percent.
Total output in July was 0.2 percent below its average level in the second quarter so August/September will need a rebound if the third quarter is not to register a contraction. Today's surprisingly soft update exacerbates the BoE's policy dilemma and leaves the outcome of next week's MPC meeting all the more clouded. That said, economic activity as a whole is still running slightly ahead of market expectations - the UK RPI now stands at 9 and the RPI-P at 19.
Market Consensus Before Announcement
GDP in the month of July is expected to fall 0.2 percent versus 0.5 percent expansion in June which compared with expectations for only a 0.1 percent gain.
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.
