TD Securities reports United Kingdom (UK) Gross Domestic Product (GDP) grew 0.1% month-on-month in May, matching their forecast and beating the market’s flat expectation. Three‑month growth remains strong at 0.7%, with services and manufacturing outperforming. However, construction dragged and they see Q2 GDP tracking 0.2% quarter-on-quarter, warning residual seasonality likely overstates first-half data, implying underlying growth may be closer to zero.

Growth solid but may be overstated

"GDP growth came out in line with our forecast of +0.1% m/m in May (mkt: 0.0%), following the small negative print in April."

"It leaves 3m/3m GDP, the ONS' preferred measure, running at a still-strong 0.7%."

"Details of the report were constructive, with both services and manufacturing out-pacing expectations in May."

"This leaves GDP growth on track for a 0.2% q/q gain in the second quarter, a notable slowdown from 0.6% in Q1."

"If this bias persists, it suggests that true underlying Q2 growth is closer to zero."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)