United Kingdom: Economic activity deteriorates in January
GDP reading: GDP dropped 0.1% month-on-month in seasonally adjusted terms in January (December: +0.4% mom), contrasting market expectations of an expansion. On a rolling quarterly basis, GDP rose at a quicker rate of 0.2% in November last year to January (October–December: +0.1% qoq).
Drivers: Declines in construction, manufacturing and mining led the GDP contraction in January, outweighing growth in services.
Panelist insight: ING’s James Smith said:
“It’s hard to pick out many consistent trends from the past few months and the simple reality is these monthly numbers are unhelpfully volatile. January’s fall only partially offsets a very healthy December for overall economic growth (+0.4%). And that strong end to the fourth quarter sets up a decent base for overall first quarter growth, which we expect at 0.3%. In short, January’s weakness shouldn’t detract from what is likely to be a fairly reasonable year for UK growth. The Treasury is dramatically boosting day-to-day spending this year.”