UK Q1 GDP Growth Revised Down To 0.2%


The UK economy advanced 0.2 percent on quarter in the three months to March of 2017, below the preliminary estimate of 0.3 percent, mainly due to broad-based downward revisions within the services sector. On the expenditure side, household spending slowed while business investment rebounded.

From the expenditure side, the positive contribution to GDP came from gross capital formation (1.2 percentage points) and household final consumption expenditure (0.2 percentage points). In contrast, net trade subtracted 1.4 percentage points from the growth.

Gross fixed capital formation grew by 1.2 percent (from 0.1 percent in Q4 2016), boosted by a rebound in business investment (0.6 percent from -0.9 percent in Q4) amid positive contributions from other machinery and intellectual property products; partly offset by other buildings and structures. Also, government spending expanded by 0.8 percent after showing no growth in Q4; while household expenditure advanced by only 0.3 percent, the lowest quarter-on-quarter growth since Q4 2014, after rising by 0.7 percent in the previous period.

Imports jumped 2.7 percent following a 1 percent decline in the previous period, with a notable contribution from transport equipment, machinery and chemicals; while exports shrank 1.6 percent after climbing by 4.6 percent in Q4. As a result, the trade deficit widened to £16.4 billion from £10.0 billion in Q4. 

From the production side, the service industries increased by 0.2 percent following a 0.8 percent gain in Q4. The main contributor to the slowdown in services was the distribution, hotels and restaurants sector, which decreased by 0.6 percent (2 percent in Q4), dragged by retail trade and accommodation services partly due to rising prices. Also, the transport, storage and communications industries decreased by 0.2 percent (0.8 percent in Q4). Meanwhile, output rose for business services and finances (0.6 percent from 0.5 percent in Q4) and government and other services (0.4 percent from 0.3 percent). Industrial output increased by 0.1 percent (0.4 percent in Q4), as output expanded for: manufacturing (0.3 percent from 1.2 percent in Q4); mining and quarrying, including oil and gas extraction (1.8 percent from -6.9 percent); and water supply and sewerage (0.7 percent from 0.9 percent). By contrast, output from electricity, gas, steam and air conditioning supply fell 4.3 percent (from 4 percent in Q4). Construction output advanced by 0.2 percent, following a 1 percent gain the previous period; and agriculture grew 0.3 percent, after a 1 percent growth in Q4.

Compared with the first quarter of 2016, the GDP grew by 2 percent, also below a flash figure of 2.1 percent.

ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com
5/25/2017 9:10:46 AM