UK's growth to be revised up

The first estimate of Q1 GDP was a surprisingly weak 0.3% qoq. They imply an upward revision of 0.1pp to 0.4% qoq. This estimate also provides the first expenditure breakdown for the quarter. Retail sales including auto fuels grew by 0.9% qoq in Q1 after 2.2% in Q4 2014. The short term correlation of sales with household consumption is low (Q4 consumption growth was 0.6%) but sales were strong enough to suggest at least a respectable performance of consumption as well. 

Moreover, some of the other components of expenditure look weak. At this stage we only have volume data for goods trade but they show a 0.5% qoq fall in exports and a 2.3% qoq increase in imports. Unless trade in services has changed dramatically that would imply net exports were a drag on growth in Q1. If that is the case then the other components of GDP would have to be strong, given the 0.4% GDP growth, expects Societe Generale. This adds to the expectation of strong Q1 consumption growth. That would be consistent with the high level of consumer confidence and rising real disposable income.