HiFX comments on the latest GDP growth figures
Commenting on the figures, Chris Towner, chief economist at HiFX, said:
“Despite sterling remaining resilient after Q3 GDP missed expectations for 0.6% growth, there’s a certain Jekyll and Hyde lurking in the background.
“If you break down the figures, they show how disjointed the economy is, with some areas booming, and others collapsing. So far sterling volatility has been kept at bay; with investors not knowing whether to focus on the positives or the negatives, they have chosen to instead sit on their hands.
“The all-important service sector reported impressive growth at 0.7%, after notching solid growth in the previous quarter of 0.6%. This is the heavyweight sector accounting for more than 75% of the economy and seems to be the component that is helping support sterling. The horror part of the data comes from the construction sector, which staged its biggest fall since 2012. On top of this, industrial output slowed to just 0.3% growth in Q3, having grown 0.7% in the previous quarter. We are used to the boom and bust volatility of the construction sector; however industrial output dropping reflects a combination of weaker demand amid a stronger currency.
“Overall the UK economy is holding up well amid a slowing global economy; however the outlook looks a little more torrid than the calm waters we have experienced over the last couple of years. A move down to the 1.30 area in GBP/EUR may ease conditions and one can sense the exporters willing this on.”
