First quarter GDP growth was upwardly revised to 0.6 percent while annual growth for the second quarter edged up from 1.2 to 1.3 percent. An increase in household and government spending sparked the revisions. Commenting on this, chief economic advisor at EY Item Club, Howard Archer said: “We believe the economy likely returned to growth in the third quarter of 2019, with expansion seen around 0.3-0.4 percent in the second quarter, against the previous period.”
While the UK economy shrank by an expected -0.2 percent in the second quarter, the effects of Brexit stockpiling ahead of the original March Brexit deadline wore off, allowing the pound free movement to rise against the euro.
The German labour market data offered some good news this morning as German retail sales edged up by 0.5 percent and the number out of work fell by 10,000, calming fears for a German recession.
The positive data failed to lift an ailing euro, however, as German inflation unexpectedly slowed in September for the third consecutive month.
The Federal Statistics Office showed that harmonised German consumer prices edged up by an annual rate of 0.9 percent, the lowest reading since November 2016, and the fifth consecutive month inflation remained below the European Central Bank’s (ECB) target of just under 2 percent.
Looking ahead to Tuesday, the euro may continue to slide against the pound if Germany’s final manufacturing PMI falls further into contraction territory.
The single currency could also soften further if the Eurozone’s annual inflation rate slips any further from the ECB target.