UK economic growth slows, as global growth disappoints
Date: 9th May 2016UK economic growth slows, as global growth disappoints
In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, includes discussion of the latest UK data in the context of fairly disappointing global developments.
The main points are:
- UK GDP growth slowed to 0.4% (QOQ) in 2016Q1, with growth more than driven by the services sector. Labour market expansion has also slowed.
- The latest Markit/CIPS surveys suggest further slowdown in 2016Q2, but growth should continue given continuing increases in real incomes and the still firm labour market.
- US growth was very weak in 2016Q1. Whilst there should be some rebound in 2016Q2, it should be noted the April employment report was disappointing. The odds on an interest rate hike in June seem to be lengthening.
- Eurozone GDP rose by 0.6% (QOQ) in 2016Q1, but this could be erratically high. March’s Eurozone unemployment rate was still in double figures, albeit the lowest since August 2011.
- Eurozone CPI inflation turned negative again in April (-0.2%), partly reflecting falling energy prices (YOY). But the “core” rate remains well below the ECB’s “just under” 2% target, despite the ECB’s stimulus packages.
- The European Commission’s Spring (May) forecasts were very cautious, warning that “the outlook for global growth had weakened further”.
- The Commission projected GDP growth rates of just 1.6% (2016) and 1.8% (2017) for the Eurozone, with huge discrepancies between the individual economies.
Ruth Lea said, “UK GDP growth slowed in 2016Q1 and appears to be slowing further in 2016Q2. Reasons cited include uncertainty surrounding the EU referendum on 23 June. But there are undoubtedly other factors at work including global uncertainties and the introduction of the National Living Wage.”
For full story: http://www.arbuthnotgroup.com/economic_perspectives_group.html
Arbuthnot Banking Group PLC:
Ruth Lea, Economic Adviser
07800 608 674, 020 8346 3482
Follow Ruth on Twitter @RuthLeaEcon
David Marshall, Director of Communications
020 7012 2432, 07502 285 835
Dan de Belder
020 3772 2561