25 Mar 2016
UK: Service sector slowdown in Q1? - RBS
Ross Walker, Senior UK Economist at RBS, notes that the service sector has been the fastest growing sub-component of UK GDP over the past year or so.
Key Quotes
“With manufacturing and construction output contracting the economy is becoming more dependent on services growth – but at a time when several key surveys (PMI, BoE Agents Scores, BCC) have turned down significantly. The January index of services data will provide greater clarity on the likely pace of GDP growth Q1.
Our forecast is for 0.5%, but with growing down-side risks. One part of the service sector where activity had been more buoyant in recent months was mortgage approvals – as borrowers intending to purchase a second home attempt to transact ahead of stamp duty changes. But even here BBA survey data edged down in February so we look for a small decline in the official BoE data.”
Key Quotes
“With manufacturing and construction output contracting the economy is becoming more dependent on services growth – but at a time when several key surveys (PMI, BoE Agents Scores, BCC) have turned down significantly. The January index of services data will provide greater clarity on the likely pace of GDP growth Q1.
Our forecast is for 0.5%, but with growing down-side risks. One part of the service sector where activity had been more buoyant in recent months was mortgage approvals – as borrowers intending to purchase a second home attempt to transact ahead of stamp duty changes. But even here BBA survey data edged down in February so we look for a small decline in the official BoE data.”