Friday preview: UK GDP story should remain unchanged

UK national growth figures for the fourth quarter of last year will be the main economic data event on Friday, along with details on the current account and the index of services and house price data from Nationwide.

The Office for National Statistics will also revise gross domestic product growth rates for 2015 and 2016, but economists did not feel it was likely that the big picture would change much.

Most recent data showed that, supported by a solid performance in the services sector, GDP grew 0.7% quarter-on-quarter and 2.0% year-on-year in the fourth quarter of 2016, the strongest quarter-on-quarter performance since the fourth quarter of 2015 and up from growth of 0.6% in both the third and second quarters of 2016.

Overall, GDP grew 1.8% over 2016, the weakest growth since 2012 and down from 2.2% the year before and 2014's 11-year high of 3.1%.

Economist Howard Archer at IHS Markit said though ONS will make some changes to the UK GDP growth rates, as previous years were being revised, "the overall story is likely to remain the same – the economy holding up well through the second half of 2016".

He noted that there have been some significant upward revisions made to construction output, with the ONS revising growth to 2.4% over 2016 instead of 1.5%, but the sector only accounts for 5.9% of total UK output.

Friday’s release will for the first time give details of households’ real disposable income in the fourth quarter and the household savings ratio, which Archer was looking forward to for the insights provided into "how much more consumers’ purchasing power was squeezed and to what extent they supported their spending by saving less".

In the third quarter, household real disposable income fell 0.6% quarter-on-quarter and was up just 0.3% year-on-year.

"Thus, the strong increase in consumer spending was partly due to the household savings ratio dipping to 5.6% in the third quarter from 6.1% in the second."

Friday 31 March

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