UK DATA: Q4 2nd Estimate GDP -0.2% q/q; +0.7% y/y
–Q4 GDP broadly in line with median forecast of -0.2% q/q; +0.8% y/y
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GDP was unrevised and broadly in line with expected. The y/y rate
was revised down a touch due to a down revision to Q3 from 0.6% to 0.5%
q/q. This, though, won’t alter the outlook for monetary policy. The
detail showed household spending rose 0.5% q/q, the first rise since Q2
2010. The rise in household expenditure are a potential sign that having
faced one of the toughest squeezes of income on record, consumers may
have finally adjusted to the downturn and are now starting to see
finances improve. Net exports added 0.6pp to growth a possible sign of a
rebalancing in the economy, but we’ve seen false dawns before. In spite
of the positive contributions from these areas, a massive fall in
investment spending and a negative contribution from inventories meant
that overall growth on the quarter was negative.