UK Economic Growth Higher Than Estimated

Economic GrowthThe growth of the UK economy through the second quarter of the year was slightly more pronounced than was previously believed, it has been revealed. Previously, growth was estimated at 3.1%compared to the same time last year, but this figure has now been revised upwards to 3.2%.

The original estimate was a preliminary one, based on an examination of just 40% of the whole UK economy. The new, amended figures are based on a subsequent evaluation, which drew on a much larger and more complete set of data to create a more accurate picture of the whole economy.

Production output grew by 0.3%, offsetting shrinkage of 0.2% in agriculture.

The change in the estimate is partly down to the construction sector, which has now been found to have performed better than was previously believed. Previously, it was estimated that the sector had experienced contraction of 0.5%, but in fact it remained steady. Compared to the same time last year, it has experienced net expansion estimated at 4.8%. Roughly 6.3% of activity in the UK economy takes place within the construction industry.

The service sector was an especially notable source of growth. This area grew by 1%, according to figures from the Office for National Statistics (ONS). Since the services industry single-handedly accounts for roughly 78% of economic activity in the UK, growth in this area has a pronounced impact on the bigger picture.

Overall, economic growth in the UK has been at its highest level for six years. Off the back of this growth, the total size of the UK economy has now surpassed the levels seen in 2008 before the financial crisis hit. The services industry is ahead of its 2008 peak by a respectable 3%. However, not every sector has surpassed pre-credit crunch levels. Output from manufacturing still languishes behind 2008 levels by 7.5%.

Accounting for more than three quarters of the UK’s economy, it is no surprise that the services industry is following similar trends to the economy as a whole. This sector has also been enjoying its strongest performance in six years, with year-on-year growth of 3.6%.

June was an especially strong month for many industries. The storage, transport and communication sectors experienced growth of 3.4% in this month, while business and financial services expanded by 4.3%. Hotels, restaurants and distribution, meanwhile, all experienced growth of 4.8% through June.

According to Markit economic forecaster Chris Williamson, the third quarter of the year is likely to see growth of 0.7%. Williamson bases this estimate both on the ONS’ figures and other recent economic surveys.