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News : UK Economy Last Updated: Oct 26, 2014 - 4:20 PM

UK GDP growth slowed in the three months to September
By Michael Hennigan, Finfacts founder and editor
Oct 24, 2014 - 4:10 PM

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UK GDP (gross domestic product) growth slowed in the three months to September, with the economy expanding by 0.7%, the Office for National Statistics said Friday.

In the second quarter, the economy grew 0.9% while GDP in Q3 was 3% higher in the three months than the same period in 2013.

Output increased in all four main industrial groupings within the economy in Q3 2014. In order of their contribution, output increased by 0.7% in services, 0.5% in production, 0.8% in construction and 0.3% in agriculture.

In Q3 2014 GDP was estimated to have been 3.4% higher than the pre-economic downturn peak of Q1 2008. From the peak in Q1 2008 to the trough in Q2 2009, the economy shrank by 6.0%.

The ONS said that in the latest quarter there was widespread growth, with increases in each of the four main services aggregates (distribution, hotels & restaurants; transport, storage & communication; business services & finance; and government & other services).

Growth in each of the main services aggregates was lower than in Q2 2014 with the exception of government & other services which grew by 0.3% in each quarter. In Q3 2014 output from services was 7.2% above its pre-economic downturn peak in Q1 2008.

There was also an upward contribution (0.07 percentage points) from production; these industries rose by 0.5%, with energy supply increasing by 6.5% following an increase of 1.5% in Q2 2014 and manufacturing increasing by 0.4% following an increase of 0.5% in Q2 2014. Partially offsetting these rises were decreases of 1.2% in mining & quarrying following a decrease of 0.3% in Q2 2014, and 0.8% in water & waste management following a decrease of 2.5% in Q2 2014. The increase in energy was caused by an increase in both electricity generation and the manufacture of gas. The increase in gas was mainly due to an increase in the demand for gas in the production of electricity.

Construction output increased by 0.8% in Q3 2014 when compared with Q2 2014, contributing 0.05 percentage points to GDP growth and follows a rise of 0.7% in Q2 2014. Compared with the previous month, August 2014 saw a dip in construction output of 3.9% following a rise of 1.9% in July 2014. Early responses for September 2014 indicate a strong rise into September.

The comparison with a year earlier shows stronger growth than the quarter-on-quarter comparison, with construction estimated to have increased 3.0% when compared with Q3 2013. This is the sixth consecutive quarter-on-a year ago increase, beginning in Q2 2013 and coming after five consecutive quarters of year-on-year negative growth.

George Osborne, the chancellor, said that growth in manufacturing and construction as well as services was very encouraging. "The UK is leading the pack in an increasingly uncertain global economy," he added.

Ed Balls, shadow chancellor, said that the GDP figures revealed a concerning slowdown in economic growth. "Most people are still not feeling the recovery," he said.

John Cridland, director-general of the CBI, the UK's biggest business lobby, said: “The economy is still growing steadily, with businesses creating jobs and investment progressing.

“These figures show that growth was predominantly driven by a robust services sector. However, we know that times are getting tougher for our industrial base, with our latest manufacturing survey showing that exports are weighing on the sector.

“Risks to growth remain, including global political instability and mounting weakness in the Eurozone, but the CBI still anticipates that healthy growth will continue.”

© Copyright 2011 by Finfacts.com

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