Latest revisions to quarterly macroeconomic data from the UK still puts the country on track for an interest rate rise by November, according to views of David Meier, economist at Julius Baer.
The fourth quarter 2014 data brought with it an upward revision, to a 0.6% growth in the economy, up from 0.5%. Consumption and net trade balances contributed, along with stronger exports. Investments were down a touch by 0.1%, but this was due to volatility in the transportation sector, Meier suggested.
He added that overall the figures pointed to an economy growing stronger than previously expected.
“Overall, the UK reached an impressive average of 2.8% over the last year, under pinning a robust growth backdrop which offers ample reason to hope for a return of inflation later this year, once the effects of lower commodity prices fade. The growth backdrop offers confidence in a return of inflation later this year. While risks are clearly biased towards later interest-rate normalisation by the Bank of England, we keep a first hike for November 2015 in our books.”
Looking further at regional data, especially for PMI data, Susan Joho, also economist at Julius Baer, said that the latest figures from Asia point to “a picture of sluggishness”. Additionally, consumption in Japan remains subdued from the effects of earlier tax increases.
China looks to be more stable in its outlook, with a PMI “around the 50 line”. More monetary and fiscal measures are expected by Julius Baer to keep that economy from slowing too much.
In Europe, however, the recovery is “expected to gain steam”. This contrasts with the US, which while relatively strong is set to suffer from the strong dollar.
“The March manufacturing PMIs are likely to show that divergence in global growth trends persist. While the US will grow at a more moderate pace this year, Europe is set to continue its recovery. The Japanese recovery could be slower than initially expected, while China will likely prevent its economy from slowing too much with further stimulus measures,” Joho said.