UK’s economy revised upwards

Britain’s economy  grew 1.2% in the second quarter of the year, a faster pace than first thought and at a rate not seen for nine years, according to official figures.

The Office for National Statistics upgraded its estimate for growth of gross domestic product between April and June, from an already surprisingly high 1.1%.

The advance, the strongest since the same figure was achieved in the first quarter of 2001, was attributed to record-breaking gains in the construction sector, which helped lift the country’s industrial production.

The latest figures showed a slight downward revision to growth from the key services sector, which accounts for more than 70% of GDP, from 0.9% to 0.7%, compared with a 0.3% rise in the first quarter.

But a record-breaking performance in construction sector output, revised upwards from 6.6% to 8.5% – its strongest rate since the first quarter of 1982 – led to the upward revision of the GDP growth rate.

The estimated growth rate for the quarter at 1.1% was already the strongest in four years when it was released last month, so a further increase will add to hopes for a solid economic recovery. However, economists have warned growth in the second quarter represents a peak in the rate of recovery and any further gains of such magnitude are unlikely.

There was no upward revision to the manufacturing sector growth in the quarter, which remains at 1.6%, compared with a 1.4% rise in the previous quarter.

A fall of 2.2% in the transport and storage industries was attributed to a poor performance from air transport, as a result of disruption caused by the volcanic ash cloud.

The figures revealed household spending rose 0.7% in the second quarter – compared with a fall of 0.1% in the first quarter. The rise in spending – the largest since the first quarter of 2008, when it was 0.8% – was attributed to a pre-World Cup spending spree, with notable rises in food and drink, households goods and recreational purchases including televisions.

Government spending was also a main driver, up 0.3% on the quarter.
Source: Press Association