UK economic growth revised upwards

UK economic growth during the second quarter of 2013 has been revised up to 0.7%, according to the Office for National Statistics (ONS).

The ONS reported growth of 0.7% instead of its initial 0.6% estimate released last month for the three months to June.

This upwards revision between the first and second estimate can be attributed to small upwards revisions across a number of the main industrial groupings.

All four major sectors – agriculture, production, construction and services – have experienced growth and exports rose 3.6% from the previous three months.

Output of the agriculture, forestry and fishing industries rose by 1.7% and electricity, gas, steam and air conditioning supply was the only production industry to contract falling by 2.4%.

Construction output rose by 1.4%, revised up from a 0.9% increase following a decrease of 1.8% in the previous quarter.

Output of the distribution, hotels and restaurants industries increased by 1.7%.

per cent %Nida Ali, economic adviser to the EY ITEM Club, said: “An upward revision to GDP was always on the cards given the construction data that was published a couple of weeks ago. While growth of 0.7% instead of 0.6% doesn’t change the broader picture, it will certainly add to the feel-good factor about the UK economy and boost confidence.

“It is particularly encouraging that what started out as a consumer and housing led recovery is now broadening out into exports and business investment. Net trade accounted for a majority of the increase in overall GDP and investment contributed 0.2 percentage points as well.

“All in all, these figures are encouraging and monthly indicators suggest that Q3 will be good as well. We are on track to achieve growth of more than 1% this year and over 2% in 2014 – after several false starts the UK finally appears to be on a sustained path of growth.”

Official figures revealed that output of the transport, storage and communication industries rose by 0.6% and business services and finance industries output also rose by 0.6%. The increase was mainly due to architectural and engineering activities, technical testing and employment activities.

Output of government and other services was unchanged following an increase of 0.4% in the first quarter of the year.

The ONS also said spending across various parts of the economy contributed to growing output.

Ian Morrison, northern assurance leader at PwC Leeds, said: “Today’s upwardly revised GDP figures provide further evidence that the UK economy is nearing escape velocity.

“Not only was overall GDP growth revised up from 0.6% to 0.7%, but preliminary estimates suggested healthy contributions to this not just from consumers but also from investment and net exports. Such early estimates of expenditure items are often revised significantly later, but if confirmed by subsequent data they would indicate a recovery that is both stronger and more balanced than most analysts had expected earlier this year.

“Taken together with recent positive signs from business surveys, retail sales and the housing market, we now expect UK GDP growth of around 1.3% in 2013 as a whole.

“But while encouraging, there are still potential pitfalls ahead – the southern Eurozone economies remain fragile, conflict in the Middle East could push up oil prices further and the US budget deficit remains a source of concern. There is still some way to go before the recovery is fully secure.”