The UK economy expanded moderately as estimated in the second quarter as household spending grew at the weakest pace in nearly three years amid rising prices.
Gross domestic product increased 0.3 percent sequentially in the second quarter, unrevised from the preliminary estimate, the latest data from the Office for National Statistics showed Thursday.
The rate came in line with the estimate published on July 26 and was slightly faster than the 0.2 percent expansion posted in the first quarter.
Data confirmed that the economy maintained a fairly sluggish pace, while the breakdown was disappointing, Paul Hollingsworth, an economist at Capital Economics, said.
However, there are still reasons to expect a modest acceleration in growth in the second half of the year, the economist noted.
In July, the International Monetary Fund projected the UK economy to expand 1.7 percent this year and 1.5 percent next year.
The expenditure-side breakdown of GDP showed relatively strong growth in government spending and investment. However, there was a slowdown in both household spending and business investment.
Household spending grew only 0.1 percent, the weakest since the fourth quarter of 2014. At the same time, government spending advanced 0.6 percent.
Gross fixed capital formation climbed 0.7 percent. Within GFCF, business investment was broadly unchanged in the second quarter, the ONS said.
Imports of goods and services have increased 0.4 percent and 1.8 percent, respectively. Exports of goods increased 1.5 percent, but exports of services dropped 0.4 percent.
The production side of GDP showed that growth was driven by services, which grew by 0.5 percent. Meanwhile, total production declined 0.3 percent as manufacturing contracted 0.6 percent. Construction fell 1.3 percent, while farm output grew 0.4 percent.
Year-on-year, GDP growth came in at 1.7 percent, in line with preliminary estimate.
Another report from the ONS showed that the index of services increased 0.4 percent in June from May. The largest contribution to the month-on-month growth came from the transport, storage and communication sector.
by RTT Staff Writer
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