FLASH: UK Q2 GDP strengthens Q3 and nominally
- The ONS’s second estimate of UK Q2 GDP growth was unrevised from 0.3% q-o-q in real terms, although stronger services prices meant nominal growth was revised up over 0.1pp to 0.74% q-o-q (output-based measure).
- A surge in services output during June leaves an unusually large statistical carry-over effect to Q3. Flat output throughout the third quarter would result in a growth rate of 0.35% q-o-q, which supports my relatively bullish forecast (0.4%).
- Higher price inflation alone does not explain the H1 slowdown, with nominal GDP growth also softening. Export volatility may have exaggerated Q1. The break in private consumption is potentially worrying, but real income growth has turned.
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