UK Q3 GDP data confirms recession is over
ONS data suggests an economic uptick for now
By Gaurav Sharma | CFO UK | Published 13:48, 27 November 12
The latest publication of the UK’s third quarter GDP by the Office for National Statistics (ONS) has confirmed that the country is officially out of a recession as suggested by last month’s preliminary estimate.
In an announcement on Tuesday, the ONS re-confirmed that the economy grew by 1 percent between July and September.
However, a spokesperson also noted that new figures indicated an economic contraction of 0.1 percent over the corresponding quarter last year, as opposed to the previous ONS estimate which had shown flat growth.
The Olympic Games helped in boosting growth over the third quarter with consumer spending growing by 0.6 percent; the strongest rate for over two years. The ONS also noted a quarterly growth in the services sector of 1.3 percent; unchanged from its previous estimate.
However, in keeping with other survey trends, the growth in industrial production was revised down to 0.9 percent from 1.1 percent.
The ONS said it will revise its growth figures for the third quarter again next month, using a more “comprehensive” set of economic performance data.
Howard Archer, chief UK economist at IHS Global Insight, felt the latest figures were encouraging and worrying in the same breath.
“The good news is that GDP growth in the third quarter was not revised down from a robust 1 percent figure. Furthermore, it was good to see decent contributions to growth from consumer spending, business investment and net trade. Indeed, growth would have been even stronger but for a run down in stocks,” he told CFOWorld.
However, Archer also felt that the figure markedly overstates the UK economy’s underlying performance during the quarter. Allowing for the various distortions to GDP in the second and third quarters, the overall impression is that the economy achieved modest underlying growth over the two quarters.
“The worrying news is that the economy is currently clearly struggling to avoid a renewed GDP dip in the fourth quarter as consumers are pressurised by inflation and there is an unwinding of the boost to growth in the third quarter coming from the Olympic Games,” he concluded.
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