GDP grows by 0.4%

GDP increases by 04%
The services industries and construction increased by 0.5% and 0.9% respectively; while production decreased by 0.8%.
  • GDP grows by 0.4%
  • Services and Construction increase by 0.5% and 0.9% respectively
  • Production down by 0.8%.
  • Household spending grows by 0.3%
  • Business investment increases by 0.5%
  • Trade deficit widens by £4.7 billion

The UK economy grew by 0.4 % in the second quarter of 2018, up from 0.2% in the previous quarter, according to the latest figures from the Office for National Statistics. (ONS).

ONS statistician Rob Kent-Smith said: “The economy picked up a little in the second quarter with both retail sales and construction helped by the good weather and rebounding from the effects of the snow earlier in the year.

“However, manufacturing continued to fall back from its high point at the end of last year and underlying growth remained modest by historical standards.

“The UK’s trade deficit noticeably worsened as exports of cars and planes declined sharply while imports rose.”

The improvement in the economy in the second quarter of 2018 will come as welcome news following the Bank of England interest rate rise to 0.75%.

Services and construction strengthen

The increase in GDP was driven by strong growth in both the services and construction industries. The construction industry showed a 0.9% increase in output for the second quarter of 2018, contributing 0.1 percentage points towards GDP growth. However, growth still remains below the quarterly average for 2017 of 1.1%.

Production sector – weakest growth since 2012

Output in the production sector fell by 0.8% in the second quarter of 2018, the weakest quarterly growth since December 2012.

Manufacturing fell by 0.9% fall, with energy supply falling by 2.7%. Meanwhile, mining and quarrying, and waste management production both rose by 0.7% and 1.9% respectively.

Household spending and business investment

Household spending strengthened slightly in the second quarter of 2018 by 0.3%.

Business investment increased by 0.5%, following a weak Quarter 1, in which business investment fell by its sharpest rate since Dec 2016.

Growth in business investment has been subdued in recent periods, due in large part to uncertainty surrounding Brexit.