UK DATA: Q1 GDP Unrevised at +0.5% q/q; +1.8% y/y; in line with median
–Q1 Household Spending -0.6% q/q; -0.3% y/y; largest q/q fall Q2 09
–Net trade adds 1.7pp to q/q growth largest since 1955
————————————————————————
UK GDP was unrevised in Q1 with output up 0.5% q/q and 1.8% y/y in line
with the median. There are two key areas which will attract attention.
First, household spending fell 0.6% q/q, the largest fall since Q2 09
showing just how households are being squeezed. Second, net exports
added 1.7 percentage points to q/q growth the largest contribution since
1955 a clear sign that Sterling’s large devaluation is paying dividends
and the economy starting to rebalance. With investment down 4.4% q/q
(largest fall since Q2 09) the only leg the domestic economy remains
standing on is govt. spending which was up 1% although this seems
unlikely to continue. Overall domestic spending fell 1.3% the largest
fall since Q1 09, underlying just why the BOE is scare d to raise rates.