GDP grows 0.6% in Q2

THE UK’s economy grew by 0.6% in the second quarter of 2013, strengthening hopes that the economic recovery may be gaining momentum.

Official figures from the Office for National Statistics today show that all four main industrial groupings within the economy (agriculture, production, construction and services) increased in Q2 2013 compared with Q1 2013.

The largest contribution came from services; these industries increased by 0.6% contributing 0.48 percentage points to the overall GDP figure.

Production output increased by 0.6%, with manufacturing up 0.4% following negative growth of 0.2% in Q1, while the construction industry was estimated to have increased by 0.9% compared with Q1 2013. In Q1 2013 construction output was at its lowest level since Q1 2001.

Despite the increase, services remain 0.2% below pre-recessionary levels, with manufacturing and construction down by a respective 10.2% and 16.5% on their levels prior to 2008.

The increases support the latest findings of the CBI Industrial Trends Survey which show that new orders in the manufacturing sector increased in the three months to July for the first time in a year, while production continued to rise modestly.

Business leaders welcomed today’s announcement.

Steve Brittan, president of Birmingham Chamber of Commerce said the rise was a positive sign for businesses. 

“The indications are that we have come through the worst and are returning to sustained economic growth,” he said.
 
“The signs of growth tie up with the chamber’s latest quarterly economic survey which indicates an increase in advanced and export sales for both manufacturing and services firms in the region.   The combination of improved exports and infrastructure spending on projects such as HS2 will be crucial for additional economic stimulus.” 

Richard Halstead, Midlands Region director for EEF, the manufacturers’ organisation, said: “This is good news for the economy with positive data from almost all parts of the economy. This has been something of a rarity in recent years and the more even contributions from services, manufacturing and construction are particularly welcome.
 
“For manufacturing, this should signal the start of a gradual improvement in output and orders books through the rest of this year.

“Indeed better news on Eurozone activity this week gives further cause for a bit of optimism for manufacturers and exporters but, importantly, we need to see output growth followed by a turnaround in business investment in the coming quarters.

“While we have some growth as last, the focus for policy makers still needs to be on ensuring it’s also sustainable.”

The latest GDP figures should foster confidence not complacency in the economy, according to business leaders in Coventry and Warwickshire.

Louise Bennett, chief executive of the Coventry and Warwickshire Chamber of Commerce, said the figures helped to bear out what the organisation’s members had been saying.

She said: “This is positive news and it certainly backs up what we are hearing both anecdotally and, indeed, in our survey work with members.

“Confidence is such an important factor in business and the more figures we see like this, the more it gives firms the impetus to invest and grow.

“But while we want it to give firms confidence, it should not lead to complacency that somehow the job of rebalancing the economy is done – far from it.

“The work to encourage and support more exports and to grow our manufacturing and engineering base has only just begun and that is work that must continue.

“The Government must continue to look at new ways in which it can remove barriers from companies to grow and take on new staff, and it must continue to engage with business to see how best to do that.

“On the whole, these figures are pleasing but it’s crucial that this recovery becomes a period of sustainable growth.”