TD Securities analysts note that UK GDP for December matched expectations at 0.1% month-on-month, but downward revisions to November left Q4 growth at 0.1% quarter-on-quarter, below consensus and Bank of England projections. The bank notes narrow sectoral strength and a sluggish broader economy, suggesting this could influence marginal MPC voters toward a potential rate cut in March.
Soft data may sway MPC doves
“Index of Services had a very similar story, being above expectations in December at 0.3% m/m, but flat and disappointing on a 3m/3m basis. Furthermore, December’s strength was idiosyncratic to the transport, administrative, and wholesale trade sectors, which doesn’t give much comfort in broad based growth.”
“UK GDP in December was in line with consensus at 0.1% m/m. However, with November’s strength being revised down, Q4 ended on a downside note at 0.1% q/q, which is below both consensus and MPR projections of 0.2% q/q. “
“Ultimately, there is enough evidence to suggest that the economy had been sluggish of late, which could further add to the MPC’s tie-breaking voters’ analysis for a cut in March.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
