UK: PMI-based GDP indicator would point to growth of 0.4–0.5% q/q in Q1 2017 – RBC CM

According to the analysts at RBC Capital Markets, if the Market/CIPS UK PMIs were to hold steady at January levels, then the PMI-based GDP indicator would point to GDP growth of 0.4–0.5% q/q in Q1 2017.

Key Quotes

“This would be a slowing in growth and a 0.4% q/q outturn would be consistent with our expectations, so the February numbers will be useful in either confirming the January growth estimate or signaling risks in either direction. Another theme to look out for is whether or not the surveys show the upward pressure on prices rising. In the manufacturing and service sectors in particular, input price sub-indices are at elevated levels and have led the pick-up we are now starting to see in CPI inflation.”

“For the manufacturing PMI, we look for a small drop to 55.5 from 55.9 last time; in construction, a February print of 51.9 from 52.2; and in services, an unchanged outcome of 54.5.”