| Consensus | Actual | Previous | Revised | |
|---|---|---|---|---|
| Month over Month | 0.2% | 0.2% | -0.5% | -0.6% |
| 3-Months over 3-Months | 0.3% | 0.3% | 0.2% | 0.1% |
Highlights
The economy grew in line with expectations in August. A 0.2 percent monthly increase in GDP matched the market consensus but only dented a slightly steeper revised 0.6 percent decline in July. The partial rebound put the 3-monthly change at 0.3 percent and lifted annual growth from 0.3 percent to 0.5 percent.
August's monthly gain was led by a 0.4 percent increase in services but within this output in consumer-facing services declined 0.6 percent. Industrial production fell a further 0.7 percent with manufacturing output down a slightly steeper 0.8 percent. Elsewhere, construction compounded July's 0.4 percent decrease with a drop of 0.5 percent.
Today's update leaves average total output in July/August 0.1 percent below its average level. Absent any revisions, September will need a monthly increase of at least 0.4 percent to prevent a third quarter contraction. Consequently, there remains a very real risk of recession over the second half of the year. This should increase the likelihood of another vote for no change at the November BoE MPC meeting. That said, with the UK RPI now at 10 and the RPI-P at 7, economic activity in general is performing much as expected.
August's monthly gain was led by a 0.4 percent increase in services but within this output in consumer-facing services declined 0.6 percent. Industrial production fell a further 0.7 percent with manufacturing output down a slightly steeper 0.8 percent. Elsewhere, construction compounded July's 0.4 percent decrease with a drop of 0.5 percent.
Today's update leaves average total output in July/August 0.1 percent below its average level. Absent any revisions, September will need a monthly increase of at least 0.4 percent to prevent a third quarter contraction. Consequently, there remains a very real risk of recession over the second half of the year. This should increase the likelihood of another vote for no change at the November BoE MPC meeting. That said, with the UK RPI now at 10 and the RPI-P at 7, economic activity in general is performing much as expected.
Market Consensus Before Announcement
GDP in the month of August is expected to rebound 0.2 percent versus 0.5 percent contraction in July which was much steeper than expected.
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.
