Trade helps UK economy grow more than first thought in Q2

Monday, 26 August 2013 00:00 -     - {{hitsCtrl.values.hits}}

LONDON (Reuters): Britain’s economy grew more than first thought in the second quarter, with net trade providing a major boost, data showed on Friday. Gross domestic product expanded by 0.7% on the quarter, better than the initial estimate by the Office for National Statistics of 0.6% and economists’ forecasts for an unrevised reading. Compared with a year ago, output was 1.5% higher, also better than the original estimate a month ago, the ONS said. Exports jumped 3.6% - the biggest rise since late 2011 – while imports climbed 2.5%, with net trade providing the biggest contribution to quarterly economic growth on the expenditure side. Consumer spending rose 0.4% on the quarter. Most key output components of GDP also grew more than originally thought. Some economists had expected this upward revision to economic growth after a raft of upbeat economic data released in the past month. British manufacturing output rose in June much more strongly than forecast, while construction growth in the April-June period is now estimated to have been healthier than thought earlier. Such evidence of growing vigour in the economy has fuelled expectations that the central bank will be forced to raise interest rates sooner than it has indicated. Earlier this month the Bank of England said it would not raise borrowing costs while unemployment remained above 7%, something it forecast would persist for at least three years. But that threshold may be reached sooner if Britain’s economic recovery speeds up. So far, the good news keeps flowing. Factories’ order books looked in their best shape for two years in August, consumer confidence and retail sales soared in July and surveys signalled robust growth across services, manufacturing and construction sectors at the start of the third quarter.