UK gross domestic product expected to continue recovery in December


It’s the lunar New Year but it is unlikely the UK’s GDP, industrial production and trade figures will be anything to go over the moon about

It’s the Lunar New Year in China on Friday and a busy day for macroeconomic releases in the UK, some of which people are unlikely to be over the moon about.

Fourth-quarter gross domestic product (GDP) numbers are expected to fall 0.5% quarter-on-quarter after rising 16.0% in the preceding quarter in what were by any measure extraordinary circumstances.

On a year-on-year comparison, GDP is expected to be down 8.1%, a slight improvement on the 8.6% fall seen in the third quarter.

Pantheon Macroeconomics reckons GDP rose by about 1.5% month-on-month in December, reversing more than half of 2.6% decline; the consensus forecast is for a monthly increase of 1.0%.

“Absent revisions, our forecast implies GDP rose by 0.8% quarter-on-quarter in Q4, showing that many firms are learning to adapt to Covid-related restrictions. In December, the risk of an end-year no-deal Brexit probably temporarily spurred the manufacturing sector. In addition, the construction sector likely continued to outperform, given that most work can continue unimpeded by social distancing rules,” said Samuel Tombs, who covers the UK beat for Pantheon.

“Output in the services sector, however, likely rose by about 1.8% in December, reversing only just over half of November’s 3.4% drop. We already know that retail sales volumes rose by just 0.3%, reversing little of November’s 3.8% fall. Similarly, OpenTable data show that restaurant diner numbers were down 47% year-over-year in December, improving on November’s 74% fall, but still 40% below October’s level. Meanwhile, data showing falling attendance at schools suggests that output in the education sector fell by about 0.5%,” Tombs said.

A pre-Brexit upturn in production

Industrial production is tipped to have risen 0.5% in December after falling 0.1% in October, while the increase in manufacturing production is expected to remain unchanged at 0.7%.

In the last set of figures pertaining to pre-Brexit Britain, the visible trade balance is expected to narrow to £15bn from £16.01bn in October, while the overall trade balance is seen expanding to £5.75bn from just under £5bn the month before.

It’s a Friday, so do not expect there to be much in the way of company news.

Trading updates are scheduled from () and (), the latter timing its update to coincide with its annual general meeting (AGM).

UBS said the chemicals company’s update will focus on two things: tonnes sold and revenues.

“We estimate tonnes sold of 870, down by just 1% on the prior-year quarter (and…



Read MoreUK gross domestic product expected to continue recovery in December

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