UK Economy Grows 0.3% in Q2


The British economy advanced 0.3 percent on quarter in the three months to June 2017, in line with market expectations and following a 0.2 percent expansion in the previous period, a preliminary estimate showed. The growth was driven by services mainly boosted by retail trade and film production and distribution, while construction and manufacturing contracted.

The services aggregate was the main driver to the growth in GDP, contributing 0.42 percentage points. Production and construction recorded falls in the second quarter of 0.4 percent and 0.9 percent respectively, each contributing negative 0.06 percentage points to GDP. Agriculture recorded moderate growth of 0.6 percent, contributing nothing to GDP due to the low industry weight.

Services grew by 0.5 percent, compared with an expansion of 0.1 percent in Q1 2017. The main contributor to growth was the distribution, hotels and restaurants sector, which increased by 1.1 percent (-0.6 percent in Q1), boosted by retail trade, except of motor vehicles, and food and beverage service activities. Transport, storage and communications sector, which grew by 1 percent (-0.8 percent in Q1), driven by motion picture activities, which grew by 8.2 percent. Business services and finance grew by 0.4 percent (0.5 percent in Q1), with office administrative activities being the main contributor to the growth. Government and other services grew by 0.2 percent (0.4 percent in Q1), with human health activities and education being significant contributors, reflecting their large weights within GDP.

Within production (-0.4 percent from 0.1 percent in Q1), manufacturing contracted by 0.5 percent (0.3 percent in Q1), due mainly to a large fall in the manufacture of motor vehicles. In addition, mining and quarrying shrank by 0.9 percent (1.5 percent in Q1) and water supply, sewerage, waste management and remediation activities decreased by 0.4 percent (1 percent in Q1). However, these negative growths were partially offset by a 0.3 percent increase in electricity, gas, steam and air conditioning supply (-4.2 percent in Q1).

Construction output was estimated to have fell by 0.9 percent after expanding 1.1 percent during Q1.

Agriculture output was estimated to have increased by 0.6 percent, following growth of 0.1 percent in Q1. Agriculture is the smallest of the main industrial groups with a weight of less than 1 percent in the output measure of GDP.

Compared with the same quarter of 2016, the economy grew 1.7 percent, also in line with market expectations and easing from a 2 percent advance in the previous period.

ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com
7/26/2017 8:50:29 AM