UK GDP Expands In Q2

The UK economy expanded in the second quarter after a revision to the services output, but growth remained below the pre-pandemic level, data released by the Office for National Statistics showed on Friday.

Gross domestic product grew 0.2 percent sequentially, which was revised up from a first estimate contraction of 0.1 percent. Nonetheless, the pace of growth was weaker than the 0.7 percent expansion posted in the first quarter.

Moreover, the ONS estimated that the level of real GDP was 0.2 percent below its pre-pandemic level, downwardly revised from the prior estimate of 0.6 percent above the pre-coronavirus period.

On a yearly basis, the economy grew 4.4 percent in the second quarter, up from the initial estimate of 2.9 percent.

On the production side, there were increases in services and construction output, while production output fell sequentially in the second quarter.

Services output grew 0.2 percent, which was revised up from a 0.4 percent fall. However, the growth eased sharply from 0.8 percent in the first quarter.

Meanwhile, production output declined 0.2 percent after revision, compared to an increase of 0.5 percent at the first quarterly estimate. This was driven by a 1.1 percent fall in manufacturing output.

Further, the increase in construction output was lowered to 1.1 percent from 2.3 percent.

On the expenditure side, real household expenditure edged up 0.1 percent, while government consumption expenditure fell 1.5 percent.

Real gross fixed capital formation declined 1.4 percent but business investment grew 3.7 percent, driven by rises in transport.

There was a narrowing in the trade deficit for goods and services, which was 4.2 percent of nominal GDP, following a deficit of 5.4 percent in the first quarter, data showed.

Excluding the alignment adjustment, there was a GBP 7.3 billion increase in inventories in the second quarter.

The revised estimate showed that the economy expanded an upwardly revised 7.5 percent in 2021 versus the initial estimate of 7.4 percent.

In a separate communiqué, the ONS said the current account deficit narrowed to GBP 33.8 billion or 5.5 percent of GDP in the second quarter.

Excluding precious metals, the underlying current account narrowed in the second quarter to GBP 32.5 billion, or 5.3 percent of GDP, from a deficit of GBP 37.0 billion or 6.1 percent of GDP in the previous quarter.

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