Latest data released by ONS - 29 June 2018
- Q1 GDP +1.2% vs +1.2% y/y estimated
- Q1 current account balance -£17.7 bn vs -£17.9 bn expected
A slight beat in the quarterly estimate and sterling jumped a little on the back of that. The yearly estimate remains unchanged. The second reading for GDP can be found here.
Q1 current account balance is equivalent to about 3.4% of GDP, the lowest since Q1 2017. Looking at the details of the report, business investment figures got revise down to -0.4% q/q after a -0.2% q/q estimate but the drop was offset but an increase in net trade which contributed +0.1% to the quarterly growth.
Overall, it's not a good report to look at on paper but the market seems to be more interested in the headline number as the poor Q1 figures are already much expected since April. ONS attributes the jump in the quarterly estimate largely to "significantly improved methods" for measuring construction output. If that's the case, I don't think that's something the market should get too excited about as it is not because of a major positive revision or anything.
Business investment figures are the lowest since Q4 2016, household disposable income is the weakest since Q1 2017, and GDP per capita is the weakest since Q3 2015. And even with the positive revision, headline quarterly GDP is the weakest since Q2 2012.
That pretty much says it all in terms of how "good" the data is. I'd look to fade any move in sterling as I don't buy the euphoria from the report.
