UK’s Economic growth during 2nd quarter of year is revised till 0.7% through Office for National Statistics (ONS) . initial estimate that was released during July, suggested that GDP- economic output of UK – had risen till 0.6% from previous quarter.
ONS said this revision did reflect a bit of upward adjustments till several industries’ estimated output.This data also depicted that the export demand did play major role towards driving growth.
When compared with one year ago, the GDP in 3 months till June was higher by 1.5%.Latest revision does add to the evidence which the economic recovery of UK might be finally gaining the momentum after about 4 stagnation years since recession of 2008-09 ended.
0.7% rate does match pace recorded within 2012’s 3rd quarter, when economy was actually buoyed by London Olympics that itself was fastest rate of growth since the year 2010.
However, ONS did caution that current economic growth rate was still quite below that rate which is experienced during the previous recoveries of recessions since the year 1945 – during that period economy typically enjoyed short growth burst as it did catch up with the level of pre-recession.
Revised data also confirmed that the 4 major economy sectors – industry, services, construction and agriculture – had expanded in the 3 months till June.
However, service sector only has steadily grown since end of recession of 2008-09, while the manufacturing sector of UK previously had continued contracting.
This latest index regarding the activity of service sector, showed that output in this sector was higher by 2.8% in June compared to the previous year, led by the financial services, as well as restaurants and hotels.
Latest release of ONS showed that the exports played bigger role compared to that expected in the boosting of growth.
The exports did rise by 3.6% from previous 3 months, also helped by weak pound as well as eurozone economy’s bottoming-out, while the imports increased by 2.5%, meaning the deficit of country would’ve narrowed.
Philip Rush, economist at Nomura, the investment bank, said,
“The expenditure breakdown was positive news. Consumption obviously fairly important to the recovery there but… the recovery in the second quarter wasn’t as reliant on consumption as we’d feared.”
Many economists do agree that in order for recovery to stay sustained, UK economy does need to be rebalanced away from consumer spending which helped to drive boom in previous decade, with the greater reliance being on investment, industry and exports.
The investment spending that’s by the businesses rose till 1.7% – still a bit tepid rate in any economic recovery – as the government spending did rise by 0.9%, despite the spending cuts within Whitehall.
From Close Brothers’ asset managers, Nancy Curtin, said,
“Barely months after the threat of a triple dip, a series of good economic results for the UK means business and consumer confidence is climbing,”
On currency markets, pound jumped by 1/2 cent against dollar on news, to about $1.563, as the traders did price in the expectations that Bank of England more likely was to rein within the monetary stimulus during coming months as well as years.
Forex.com’s research director Kathleen Brooks, said,
“These figures came as a little bit of a surprise and that is why we saw the break back above that $1.56 level. Data out of the UK could help the market potentially challenge the Bank of England’s pledge to keep rates low until 2016.”
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