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UK economic growth picks up to 0.5% | UK economic growth picks up to 0.5% |
(40 minutes later) | |
The UK economy grew by 0.5% in the third quarter of 2011, according to the Office for National Statistics (ONS). | The UK economy grew by 0.5% in the third quarter of 2011, according to the Office for National Statistics (ONS). |
The growth in the July-to-September period compared with a 0.1% expansion in gross domestic product (GDP) in the previous quarter. | The growth in the July-to-September period compared with a 0.1% expansion in gross domestic product (GDP) in the previous quarter. |
Output of the production sector rose 0.5% in the third quarter, compared with a 1.2% fall previously. | Output of the production sector rose 0.5% in the third quarter, compared with a 1.2% fall previously. |
Service sector growth was up 0.7%, against a rise of 0.2% in the previous quarter. | Service sector growth was up 0.7%, against a rise of 0.2% in the previous quarter. |
The ONS emphasised that growth in the second quarter of the year had been dampened by one-off factors such as the extra bank holiday for the royal wedding. | The ONS emphasised that growth in the second quarter of the year had been dampened by one-off factors such as the extra bank holiday for the royal wedding. |
As a result of these factors, analysts said the third-quarter figures should not be interpreted as a big economic rebound. | |
James Knightley, at ING Financial Markets, said: "While the Q3 growth rate looks respectable, it is important to remember that this follows a Q2 figure depressed by having fewer working days because of the royal wedding and supply disruptions caused by the Japan earthquake/tsunami. | |
href="/news/special/business/11/economy_jargon/css/main.css?cachebuster=cb00000001" rel="stylesheet" type="text/css" /> Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms: AAA-rating The best credit rating that can be given to a borrower's debts, indicating that the risk of borrowing defaulting is miniscule. href="/news/business-15060411">Glossary in full | |
"So, for the economy to have only grown 0.5% in Q3 suggests the underlying picture remains weak," Mr Knightley said. | "So, for the economy to have only grown 0.5% in Q3 suggests the underlying picture remains weak," Mr Knightley said. |
Howard Archer, economist at IHS Global Insight, added: "This performance overstates the underlying strength of the economy and this is likely to be as good as it gets for some time to come." | |
However, Chancellor of the Exchequer George Osborne described the figures as "a positive step" and better than many people had forecast. | |
"Of course the British economy has got this difficult journey. It is a journey made more difficult by the kinds of things you see for example today in the markets because of the situation in the eurozone. | |
"But we are determined to finish this journey," Mr Osborne said. | |
Asked whether the government would stick to its austerity plans, Mr Osborne said: "We have to understand that this journey is the only route that will take us to prosperity and recovery." | |
But concerns about the UK economy were not helped by latest Purchasing Managers' Index data, also released on Tuesday. | |
The index for manufacturing activity in October fell to 47.4 points, from 50.8 points in September. Any reading above 50 indicates expansion. | |
Victoria Cadman, economist at Investec, said the PMI data was "disappointing" and "implies that the manufacturing sector is contracting". | |
What is your reaction to these figures? How are you coping with the current economic climate? Send us your comments and experiences using the form below. | What is your reaction to these figures? How are you coping with the current economic climate? Send us your comments and experiences using the form below. |