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Brexit latest: Services power UK economy in wake of referendum Brexit latest: Services power UK economy in wake of referendum
(35 minutes later)
The UK’s dominant services sector grew strongly in July according to the latest official data, confirming the impression that the economy has so far successfully brushed off the impact of the Brexit vote.The UK’s dominant services sector grew strongly in July according to the latest official data, confirming the impression that the economy has so far successfully brushed off the impact of the Brexit vote.
Services account for almost 80 per cent of UK output and the ONS said the sector grew 0.4 per cent between June and July in the wake of the vote, well ahead of the expectations of City of London analysts. Services account for almost 80 per cent of UK output and the ONS said the sector grew 0.4 per cent between June and July in the wake of the vote, well ahead of the expectations of City of London analysts of 0.1 per cent growth.
This was the first tranche of "hard" data on the UK's most important sector and was much anticipated by economists. This was the first tranche of "hard" data on the UK's most important sector and had been much anticipated by economists.
"This fresh data tends to support the view that there has been no sign of an immediate shock to the economy, although the full picture will continue to emerge" said Darren Morgan of the ONS."This fresh data tends to support the view that there has been no sign of an immediate shock to the economy, although the full picture will continue to emerge" said Darren Morgan of the ONS.
GDP growth in the three months to June was also revised up, with the ONS seeing it rising 0.7 per cent, better than the 0.6 per cent previously estimated.GDP growth in the three months to June was also revised up, with the ONS seeing it rising 0.7 per cent, better than the 0.6 per cent previously estimated.
The upgrade was primarily a result of business investment coming in stronger than previously estimated, growing by 1 per cent in the quarter rather than 0.5 per cent.The upgrade was primarily a result of business investment coming in stronger than previously estimated, growing by 1 per cent in the quarter rather than 0.5 per cent.
The output growth of the services industry in the quarter was also revised up from 0.6 per cent from 0.5 per cent previously. The output growth of the services industry in the quarter was also revised up from 0.6 per cent from 0.5 per cent previously.
The strength of services looks set to continue, with the latest consumer confidence reading from GfK publishe today showing that confidence in September was back up to where it was immediately before the referendum, having seen a sharp dip in July. The news lifted pound up against the dollar to $1.2990 and against the euro to €1.1612, although those gains rapidly melted away.
In separate official data, the current account deficit came in at £28bn for the second quarter, better than the £30.5bn City of London analysts had pencilled in. Financial traders have been lowering the expectations of another interest rate cut by the Bank of England later this year as forward-looking survey data has come in considerably better than expected.
More follows Today's strong post-referendum services data is likely to re-inforce that trend.
"The jump in services output in July is the clearest sign yet that the Brexit vote has not pushed the economy into a recession" said Samuel Tombs of Pantheon Macroeconomics.
The strength of services looks set to continue, with the latest consumer confidence reading from GfK published today showing that confidence in September was back up to where it was immediately before the referendum, having seen a sharp dip in July.
The biggest contribution to the growth of services in July came from transport storage and communication, followed by business services and finance.
The Chancellor, Philip Hammond, welcomed the latest batch of data, saying it showed "momentum" in the economy.
"We want to build on this strength as we forge a new relationship with the EU and deliver an economy that works for all. The UK is well-positioned to deal with the challenges, and take advantage of the opportunities, that lie ahead,” he said.
In separate official data, the current account deficit came in at £28bn for the second quarter,