The preliminary estimate of UK Q2 GDP showed a slight upward revision compared to the advance reading. Second quarter GDP was upwardly revised from -0.7% Q/Q to -0.5% Q/Q, in line with expectations, but the details are very poor. Household consumption contracted by 0.4% Q/Q, the second straight quarter of contraction. Also gross fixed capital formation disappointed, falling by 3.2% Q/Q, while only a limited contraction (by 0.6% Q/Q) was forecast. Government consumption stayed flat from the previous quarter and also net-exports were a drag on growth in the three months to July. Exports fell more than expected (by 1.7% Q/Q), while imports rebounded by 1.4% Q/Q. The only positive contribution came from changes in inventories, which added 0.5% to GDP.
While the headline figure was upwardly revised, the details are quite poor with almost all components surprising on the weaker side of expectations. According to BoE estimates, the Queen’s Jubilee knocked 0.5% off GDP, so without this effect the economy was just stabilising. Hopes are for a strong rebound in the third quarter, partly boosted by the Olympic Games, but the first indications on consumption for August are disappointing.