Sterling Pulls back on Weak Retail and Sales Ahead of UK GDP Data
Economics / UK Economy Oct 23, 2009 - 03:24 AM GMTSterling pulled back from highs following disappointing UK retail sales numbers for September. Official data revealed that retail sales were flat on the month, in contrast to market expectations of a 0.5% rise. These figures feed into the first estimate of Q3 GDP, which we expect to show a small quarterly rise of 0.1%, the first positive outturn since Q1 2008.
The market consensus is for a 0.2% rise, though forecasts range from flat to 0.7%. Recent business surveys suggest that the economic recovery momentum is likely to continue into Q4, but prospects of fiscal tightening, continued rises in unemployment and weak credit growth mean that the recovery profile is likely to be uneven. Moreover, the level of GDP may not return to previous peaks until 2012, suggesting underlying inflation pressures will remain subdued.
The first estimate of Q3 GDP for the euro zone is not due until the middle of next month. However, two key business surveys will be released today: the German IFO and the euro zone PMI surveys.
We see the IFO survey rising to 92 in October from 91.3, and improvements in both the manufacturing and services PMI surveys. Such survey evidence suggests that growth in the euro zone as a whole is likely to return to positive quarterly growth in Q3 (Germany and France already posted small positive growth in Q2). Elsewhere, Fed Chairman Bernanke
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For more information: Emile Abu-Shakra Manager, Media Relations Lloyds TSB Group Media Relations Tel 020 7356 1878 http://www.lloydstsbcorporatemarkets.com/
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