Second estimate of UK Q2 GDP was unchanged from the previous estimate and in line with market expectations. Data released earlier on Friday showed that second estimate of UK GDP for 2016 Q2 saw growth unrevised from its previous estimate of 0.6 percent q/q. Year-on-year growth was also unchanged at 2.2 percent y/y, the strongest since 2013 Q2.
Details of the report showed consumer expenditure was the main driver of activity, expanding by 0.8 percent q/q, after 0.7 percent in 2016 Q1. Business investment expanded by 0.5 percent q/q in Q2 after contractions over the preceding two quarters, but remains weak.
Pace of expansion of UK-weighted global demand remains modest. However, post-referendum depreciation of sterling should provide some support. Strength in Q2 GDP raises scope for a marked slowdown in the next quarter, especially in light of the weakness seen in a broad swathe of July survey data.
"Nevertheless, the better tone of some of the most recent surveys for August – a trend we expect to continue in the data over the coming week – does suggest that the immediate downside could prove relatively muted," said Lloyds Bank in a report.
