UK Q2 GDP Growth Confirmed at 0.4%


The British economy grew by 0.4 percent on quarter in the three months to June 2018, unrevised from the first estimate and above the previous period's figure of 0.1 percent. Household consumption rose faster than initially thought while business investment unexpectedly contracted amid uncertainty around Brexit.

From the expenditure side, household consumption rose at 0.4 percent in the second quarter (vs first estimate of 0.3 percent and 0.5 percent in Q1). The slowdown in overall household consumption growth was due in part to a fall in energy use following the adverse weather earlier in the year. Meanwhile, gross fixed capital formation shrank 0.5 percent (vs first estimate of 0.8 percent and -1 percent in Q1), due to a 0.7 percent decline in business investment amid uncertainty around Brexit (vs first estimate of 0.5 percent and -0.5 percent in Q1). Also, government spending dropped 0.4 percent (vs first estimate of 0.4 percent and 0.2 percent in Q1).

Imports of goods and services dropped 0.2 percent (vs first estimate of -0.8 percent and -0.3 percent in Q1) and exports slumped 2.2 percent (vs first estimate of -3.6 percent and -0.8 percent in Q1). As a result, the trade deficit widened sharply to £5.659 billion from £2.553 billion in the previous period.

From the production side, services output grew 0.6 percent in the second quarter (vs first estimate of 0.5 percent and 0.3 percent in Q1). This marked the strongest quarterly growth in services since the last quarter of 2016, mainly driven by wholesale & retail trade, transport storage & communication, and accommodation & food services. Also, construction activity rebounded firmly (0.8 percent vs first estimate of 0.9 percent and -1.6 percent in Q1). By contrast, industrial production shrank 0.8 percent in the second quarter (vs 0.1 percent in Q1) due to declines in manufacturing and electricity, gas, steam & air conditioning supply; while output rose for mining & quarrying and water supply, sewerage, waste management & remediation activities.

UK Q2 GDP Growth Confirmed at 0.4%


ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com
9/28/2018 12:00:35 PM