Yael Selfin, Chief Economist at KPMG in the UK, comments on today’s GDP data
“Today’s figures show that GDP rose by 0.3% in May, following a 0.2% rise in April, with good weather propelling retail and wholesale industries according to the ONS. Manufacturing performance was weak, with survey evidence pointing at continued weakness in June, while the construction industry has bounced back since May.
“Our latest survey, however, shows that the boost from the warm weather and from England’s performance in the World Cup will have encouraged household spending on specific categories, and that June’s retail spending was less buoyant than hoped for. We therefore expect overall consumer spending to have picked up only marginally in the second quarter of this year, as meagre rises in households’ real earnings and uncertainties over Brexit hold spending back.
“While the labour market is expected to remain tight and inflation is expected to ease further, there is little scope for real earnings to rise above 1%, unless productivity performance improves, making consumer spending a weak engine of growth over the next few years. The Bank of England’s worry over dwindling spare capacity and surging domestic inflationary pressures may be premature and the MPC may wish to hold off on raising rates until November.”
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Notes to Editors:
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 14,500 partners and staff. The UK firm recorded a revenue of £2.2 billion in the year ended 30 September 2017. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 154 countries and territories and has 200,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.