UK DATA: Q3 Revised GDP +0.5% q/q; +0.5% y/y
–Q3 GDP in line with median forecast
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Economic growth in Q3 was driven by a large build up of stocks,
while household expenditure was flat, suggesting the economy remains
extremely fragile. GDP was unrevised at 0.5% q/q and 0.5% y/y. By far
the largest contribution to growth came from a sharp rise in inventories
which possibly indicates that firms have been unable to sell stock as
the global slowdown took hold over the summer. Household spending was
flat on the quarter and down 1.5% on the year. While this was the
strongest outturn since Q2 2010 it still shows the sector squeezed by
the fall in real incomes. The BOE Inflation Report forecast growth to
flatline over the next three quarters with output in 2012 likely to rise
only 0.9%. Barring some addition from household spending, a possible
draw-down in stocks could push growth into negative territory.