UK Q2 GDP Growth Confirmed at 0.3%


The UK economy expanded 0.3 percent on quarter in the three months to June of 2017, unrevised from the second estimate of GDP and following an upwardly revised 0.3 percent expansion in the previous period. Fixed investment was the main driver of growth while household expenditure rose at a slower pace. From the production side, the services industries were the only positive contributor to output GDP growth.

From the expenditure side, the positive contribution to GDP came from net trade (0.4 percentage points), gross fixed capital formation (0.1 percentage points) and household final consumption expenditure (0.1 percentage points); while business investment and government spending had no contribution to growth.

Exports of goods and services jumped 1.7 percent after falling 0.3 percent in the previous period, while imports rose at a slower 0.2 percent, following a 1 percent gain in Q1. As a result, the trade deficit narrowed to £9.2 billion from £11.3 billion in Q1. 

Gross fixed capital formation grew by 0.6 percent (0.5 percent in Q1), with business investment rising 0.5 percent (0.8 percent in Q1). Meanwhile, household expenditure advanced by only 0.2 percent, the lowest quarter-on-quarter growth since Q4 2014, after rising by 0.4 percent in the previous period. The slowdown was driven by a decline in growth in household expenditure on transport (-2.7 percent), including motor cars. Government spending edged up 0.1 percent (0.2 percent in Q1).

From the production side, the services industries were the only positive contributor to output GDP growth, at 0.3 percentage points.

The services industries increased by 0.4 percent following a 0.1 percent gain in Q1. The largest contribution came from distribution, hotels and restaurants (0.9 percent from -0.8 percent in Q1) with retail trade except of motor vehicles and motor cycles providing most of this increase. Also, upward contribution came from: Transport, storage and communications (1.2 percent from -0.8 percent); business services and finances (0.1 percent from 0.6 percent); and government and other services (0.3 percent from 0.4 percent). Industrial output contracted by 0.3 percent (0.3 percent in Q1): The greatest decrease was in water supply and sewerage (-1 percent from 2 percent); manufacturing, the largest component of production (-0.3 percent from 0.6 percent); and electricity, gas, steam and air conditioning supply (-0.3 percent from -4.1 percent). These decreases were moderated by an increase in mining and quarrying (0.6 percent from 2.9 percent). Construction output shrank by 0.5 percent, following a 1.9 percent gain the previous period.

ONS | Joana Ferreira | joana.ferreira@tradingeconomics.com
9/29/2017 9:07:54 AM