U.K.’s Q3 GDP growth likely to have remained unchanged from initial estimate of 0.5 pct

The U.K.’s third quarter GDP growth is expected to have stayed unrevised. The economic growth release will give the initial expenditure breakdown for the September quarter. The extremely solid retail sales growth probably signifies that the consumption growth of 0.9 percent quarter-on-quarter recorded in the second quarter is expected to have repeated in the third quarter, said Societe Generale in a research note.

Meanwhile, the monthly trade data suggests that net external trade contributed positively to the economic growth following a negative contribution in the prior quarter.

“We expect that the estimate of overall GDP growth will be unchanged from the first estimate of 0.5 percent qoq after 0.7 percent in 2Q”, noted Societe Generale.

This suggests that the other expenditure components in all might have contributed negatively to the third quarter economic growth. Inventories are likely to have been cut following a solid build-up in the second quarter. There is a possibility that investment might have softened as well.

In the meantime U.K.’s retail sales are expected to have taken a breather before Black Friday. In early October survey, the balance of reported sales had increased to +21 from -8. This shows that the clothing sales recovered as consumers purchased autumn fashion lines. There is a greater possibility that there might be a dip in the early November survey as that sharp increase appears to be unsustainable, added Societe Generale.