U.K. 1Q GDP at Risk as Construction Outputs Falter

U.K. Q1 GDP could be revised down following weak Q1 construction figures. Today’s construction release showed output down 9.0% q/q and 6.0% y/y, the largest q/q dip since 1963 and the ONS has now announced that in light of recent construction data, Q1 GDP will be revised. In its second Q1 GDP release, the ONS reported a construction decline of just 2.4% q/q. This means the already weak 1.9% q/q headline GDP drop for Q1 could be revised lower. However, given how backward looking the data is, it has little impact on the BoE outlook and gilt futures shrugged off the announcement. Recent sentiments indicator suggest that the economy contracted by a far slower pace in Q2, with May services PMI breaking through the 50-mark and construction PMI have surged.