A post in March suggested that the UK economy was reaccelerating, contrary to mounting consensus gloom at the time. An upbeat view seemed justified by a rise in real narrow and broad money expansion in late 2015 / early 2016 and was judged to be consistent with incoming economic data – excepting the widely-watched but historically-unreliable purchasing managers’ surveys.

The notion that economic growth has picked up is gaining credence, following recent upside surprises in a range of series including industrial / construction output, retail sales and the labour force survey unemployment measure. According to the FT, “The data have boosted hopes that economic growth will come in far stronger than expected in the second quarter.”

Services turnover for April released today continues the pattern. The turnover survey is an important input to the services output index, which accounts for 79% of the output-based measure of GDP. Real turnover* is estimated here to have risen strongly in April – see chart.


A post last week noted that a 0.2% rise in services output in April would imply that GDP for the month was 0.4% above its first-quarter average, given previously-reported strength in industrial / construction output (ignoring any revisions to prior data). A 1.9% increase in retail sales volume in April, however, will contribute +0.2 of percentage point to services output and the turnover result suggests an additional boost from other industries. A 0.4% monthly rise would lift GDP to 0.6% above its first-quarter level.

The strength in some April series may partly reflect the early timing of Easter this year, implying a possible reversal in May / June. A Brexit vote could abort the recent pick-up if it leads to corporate retrenchment – corporate narrow money trends, discussed in Tuesday’s post, should be informative about any such effect. A win for Remain, however, would probably be followed by a significant upgrade to consensus growth expectations.

*Total ex. wholesale trade turnover, deflated by services producer prices, seasonally adjusted.