- Economists seek a substantially lower pace of UK growth in today’s Q3 GDP
- Survey data for Britain’s retail trade industry on track to strengthen a bit in October
- US durable goods orders projected to post the first annual increase since May
The UK’s post-Brexit economy comes into sharper relief today with the preliminary release of Q3 GDP data, followed by the October update for the CBI Distributive Trades Index (a proxy for the retail industry in Britain). Later, we’ll see the September figures for US durable goods orders.
UK: Q3 GDP (0830 GMT): There are two competing narratives circulating on the outlook for Britain’s economy in the post-Brexit era. The optimistic view is that the expected blowback from the June vote to leave the European Union is overstated. But the so-called realists counter that trouble is destiny, but it will arrive slowly but steadily.
Today’s first look at the official third-quarter GDP report will be seen as a reality check. But in keeping with recent updates, the numbers are expected to offer support for both sides of this debate, depending on how you choose to spin the numbers.
Econoday.com’s consensus forecast sees UK economic growth sliding to a quarterly 0.3%, down sharply from 0.7% in Q2. The drop looks worrisome, although a 0.3% pace is still strong enough to keep hope alive that any Brexit-related slowdown will be modest.
Whatever the numbers show, “it is early to come to many conclusions,” the chief economist at Daniel Stewart & Co. in London told CNBC yesterday.
But it’s not hard to find economists who are expecting the headwinds to strengthen in the months ahead. PwC’s senior economic adviser says UK growth will be roughly 1% in 2017, half as much as the recent trend. “That will push the UK down the G7 growth league, below the US, Canada, Germany and France,” he advised on Monday. “So our economy will be taking a hit over the next year or two in the form of lower growth, but an outright recession should still be avoided.”
A downside surprise in today’s GDP data, however, will send the optimists running for cover.
UK: CBI Distributive Trades Index (1000 GMT): Survey numbers for the retail industry offer another clue about the UK economy today. Based on the crowd’s expectations, the news is on track to provide a mildly upbeat round of data.
Econoday.com’s consensus projection calls for a modestly higher October reading of the Distributive Trades Index, which is considered a leading indicator of the hard data on consumer spending.
The previously reported official September release for retail sales looks encouraging. Although spending was unchanged on a monthly basis, the year-on-year trend continued to rise at a healthy rate of 4.1%. That’s down from August’s 6.6% pace, but most analysis read the numbers as a sign that the consumer sector is stable after the June referendum.
“The underlying trend is one of strength, suggesting consumer confidence has remained steady,” said a spokesperson for the Office of National Statistics.
Today’s CBI release isn’t expected to give the crowd a reason to think otherwise.
US: Durable Goods Orders (1230 GMT): Survey data suggests that the beleaguered manufacturing sector is (again) poised for recovery. Will today’s hard data on durable goods orders reaffirm that story?
The outlook certainly looks brighter after Monday’s PMI report revealed that manufacturing turned up in the flash estimate for October. The headline index jumped to 53.2 this month, a 12-month high.
“Manufacturing showed further signs of pulling out of the malaise seen earlier in the year, starting the fourth quarter on a solid footing,”
said the chief economist at IHS Markit.
“Both output and new orders are rising at the fastest rates for a year amid increasingly widespread optimism that demand will pick up again after the presidential election, which has been commonly cited as a key factor that has subdued spending and investment in recent months.”
Today’s figures for orders are a month behind the survey report, although the September profile from the government is expected to offer a degree of optimism. Econoday.com’s consensus estimate sees last month’s orders rising 0.2% from August, which translates to an implied 1.8% annual gain – the first year-on-year advance since May.
If the upbeat forecast matches the actual numbers, the case for optimism on manufacturing’s outlook will resonate a bit deeper.
Disclosure: Originally published at Saxo Bank TradingFloor.com