Third quarter shaping up better than expected

We learned this week that much of the strength of consumption growth in the second quarter was sustained in July, suggesting that third quarter GDP growth will be stronger than we had anticipated. The July retail sales figures showed control group sales rising by 0.5% in July, leaving the 3m/3m growth rate at 5.9% annualised. Even factoring in the weakness of auto sales, the July data provide a strong base and suggest that real consumption will post another decent gain in the third quarter.