Belfast Telegraph

Friday 29 August 2014

Recovery slows as GDP grows 0.2%

The UK economic recovery slowed in the second quarter after figures estimating GDP growth remained unrevised from last month

The UK's economic recovery slowed in the second quarter after official figures estimating GDP growth of 0.2% were unrevised.

The downturn, which followed the biggest fall in activity for manufacturing and other production industries in two years, was down on the 0.5% increase in the previous quarter, said the Office for National Statistics (ONS).

The ONS has already said that a number of seasonal factors, such as the royal wedding and the unusually hot spring clouded the picture, and real growth could be up to 0.5 percentage points higher as a result.

Samuel Tombs, UK economist at Capital Economics, revealed the third quarter has the potential to be stronger as the temporary factors flagged by the ONS unwind.

However, he said: "With the forward looking indicators for the third quarter remaining downbeat and recent stock market turmoil clouding the outlook, we strongly doubt that any small pick-up in GDP growth in third quarter will reignite the recovery."

The overall second quarter growth figure was unchanged on the previous month's estimate, despite a greater than previously thought decline in production industries to 1.6% from 1.4%.

This was its biggest fall since the first quarter of 2009 and was caused as food and transport equipment production was lower than previously expected.

There had also been the biggest falls in mining and quarrying output since 2006, while electricity, gas and water supply also fell, partly as a result of the hot weather in April.

The powerhouse services sector saw growth of 0.5%, which was unchanged from the previous estimate, despite figures showing that transport, storage and communications grew less than previously thought, driven by a slowdown in the telecommunications industry.

However, this was offset by a greater than previously thought rise in hotels and restaurants and business services and finance. Separate figures showed that the services sector grew by 1.6% in June.

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