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| Economy shrinks less than thought | |
| (20 minutes later) | |
| The rate of contraction of the UK economy in the three months from April to June has been reduced by the Office for National Statistics (ONS). | The rate of contraction of the UK economy in the three months from April to June has been reduced by the Office for National Statistics (ONS). |
| Gross domestic product (GDP) has been revised to a fall of 0.7% from 0.8% compared with the previous quarter. | Gross domestic product (GDP) has been revised to a fall of 0.7% from 0.8% compared with the previous quarter. |
| The year on year decline has been revised to 5.5% from 5.6%. | The year on year decline has been revised to 5.5% from 5.6%. |
| The ONS said the revision was due to better-than-expected output from the manufacturing, energy, wholesaling and motor vehicle sectors. | The ONS said the revision was due to better-than-expected output from the manufacturing, energy, wholesaling and motor vehicle sectors. |
| "It seems to have benefited from strength in general government spending and weakness in imports, which counts as a positive in GDP figures," said Stephen Lewis at Monument Securities. | "It seems to have benefited from strength in general government spending and weakness in imports, which counts as a positive in GDP figures," said Stephen Lewis at Monument Securities. |
| 'A surprise' | 'A surprise' |
| The 0.7% decline was a significant improvement on the 2.4% contraction in the previous quarter. | The 0.7% decline was a significant improvement on the 2.4% contraction in the previous quarter. |
| The small improvement cannot obscure the severity of the UK recession David Kern, British Chambers of Commerce | |
| But the annual drop of 5.5% remains the biggest since records began in 1955. | But the annual drop of 5.5% remains the biggest since records began in 1955. |
| "The upward revision was a bit of a surprise but it still shows a fairly steep contraction," said George Buckley at Deutsche Bank. | "The upward revision was a bit of a surprise but it still shows a fairly steep contraction," said George Buckley at Deutsche Bank. |
| "The most important piece of news is on inventories, which continued to fall at a fairly aggressive pace." | "The most important piece of news is on inventories, which continued to fall at a fairly aggressive pace." |
| Inventories are items such as the amount of raw materials held by a manufacturer or items to sell that are kept in stock by a retailer. | Inventories are items such as the amount of raw materials held by a manufacturer or items to sell that are kept in stock by a retailer. |
| Despite the revision, the UK is still behind countries such as France and Germany that came out of recession by posting positive growth in the second quarter of the year. | Despite the revision, the UK is still behind countries such as France and Germany that came out of recession by posting positive growth in the second quarter of the year. |
| Many economists are predicting that the UK economy will grow in the third quarter of the year, which covers the three months from July to September. | Many economists are predicting that the UK economy will grow in the third quarter of the year, which covers the three months from July to September. |
| "I think this breakdown is consistent with the chance of seeing positive growth in Q3," said Colin Ellis at Daiwa Securities. | "I think this breakdown is consistent with the chance of seeing positive growth in Q3," said Colin Ellis at Daiwa Securities. |
| 'Slight relief' | |
| Some economists had been expecting the latest GDP figure to be revised downwards, especially after the official figures for business investment on Thursday. | |
| Business investment in the second quarter of the year fell 18.4% from the same period the year before to £29.89bn. | |
| It was the fastest rate of decline since records began 42 years ago. | |
| "After this week's poor business investment figures, the GDP revision comes as a slight relief," said David Kern, chief economist at the British Chambers of Commerce. | |
| "However, the small improvement cannot obscure the severity of the UK recession and the challenges facing us." |