LONDON (MNI) – Economic growth in the UK rose firmly in the third
quarter led by a boost from net trade and the largest rise in household
spending for two years, figures from National Statistics showed Tuesday.
GDP was unrevised on the quarter at 1%, a boundback from the
Jubilee related downturn in Q2, and revised down slightly to show a
small fall of 0.1% on the year from the initially estimated unchanged
outturn.
Some commentators may cheer the latest rise in household spending,
which rose 0.6% on the quarter, the highest since Q2 2010, as a sign of
a turn in the economy, but the poor income background of the consumer
suggests we are unlikely to see significant growth sustained here.
More cheer should be made for the external sector, with net trade
adding 0.7 percentage point to growth in Q3 — exactly the sort of
growth the UK economy needs to sustain. Again, though, the latest rise
needs to be put in the context of a 0.8 percentage point drag in the
previous quarter.
The Bank of England certainly doesn’t see the large rise in growth
in Q2 as likely to be sustained. In its latest Inflation Report the BOE
implicitly forecast a decline in GDP on the quarter in Q4, according to
MNI forecasts.
Government spending continued to help drive GDP growth, rising 0.6%
on the quarter, and investment spending also helped, rising 0.5%.
On an output basis, growth was driven by a 1.3% rise on the quarter
in services and a 0.9% in industrial production.
Construction output continued to fall, declining 2.6% on the
quarter in Q3 following a 3% rise in the previous quarter.
— London newsroom: 00 44 20 7862 7491; email:
ukeditorial@marketnews.com
[TOPICS: M$B$$$,MABDS$,MT$$$$]
