The UK economy performed better than previously thought in the second quarter of 2013, as the Office of National Statistics (ONS) revised up its estimate of quarter on quarter growth to 0.7 percent, up from 0.6 percent. The level of output now stands 1.5 percent above the same quarter a year ago, although it remains 3.2 percent below the peak level in Q1 2008.
The upward adjustment to growth came as a result of revisions across a number of sectors. Output growth in agriculture was revised up to 1.7 percent – from 1.1 percent – while manufacturing growth was adjusted up to 0.7 percent – from 0.4 percent previously – and construction output growth rose to 1.4 percent – up from 0.9 percent. These revisions were more than enough to offset downward revisions in sectors such as electricity and gas and extractive industries.
Solid export performance, which saw exports increase by 3.6 percent over the quarter, contributed 1.1 percentage points to headline growth – the largest export contribution since 2011 Q3. After accounting for imports, net trade made a positive contribution of 0.3 percentage points, the second successive quarter in which trade has boosted growth.
Consumers continued to support the economic recovery, increasing their spending by 0.4 percent in real terms over the quarter. This comes as indicators such as the YouGov/Cebr HEAT index show consumer confidence reached a three year high in the three months to July this year, supported by a recovery in the housing market.
Investment also provides cause for concern. Fixed investment – that which is expected to generate future growth in national income – was 4.8 percent lower than a year earlier, despite increasing by 1.7 percent over the quarter.
Meanwhile, the Government appears to face ongoing difficulties in reducing spending, the data shows that public sector spending is still on the up in real terms. In the second quarter of this year expenditure increased by 0.9 percent, the fourth consecutive quarterly increase.