UK out of recession as GDP rises 1%
This was the strongest quarterly figure since Q3 2007 and was announced by the Office for National Statistics in its first estimate this morning.
The ONS said production rose by 1.1% on the quarter, and services by 1.3%, but construction continued to weigh heavy with a 2.5% contraction.
Ticket sales for the Olympics added a 0.2 percentage point increase to the headline figure.
Capital Economics estimated that a reversal of the Q2 “Jubilee effect” – lost output due to extra public holidays – added a further 0.5% to the Q3 number.
“Even accounting for this suggests that underlying output managed to rise by a small amount – an improvement on recent quarters,” said Capital chief UK economist Vicky Redwood.
“As the Olympic effects unwind, it is still possible that the economy contracts again in Q4. Indeed, the business surveys have been painting a slightly gloomier picture, suggesting that underlying output is still stagnating or even falling slightly.”
Prime minister David Cameron appeared to suggest a positive figure for Q3 was on the cards when he said more “good news” was on the way for the UK economy, following falling inflation numbers and an improving employment picture.
Earlier this week Bank of England governor Mervyn King warned the UK would face “zigzag” growth for a number of years. But today’s figure would appear to reduce the likelihood of further quantitative easing at the Bank’s November meeting.
Sterling had traded at $1.6087 against the dollar prior to the announcement but jumped to $1.6125 on the news.