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Nov
UK economic growth picks up to 0.5%
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.
But analysts said growth in the second quarter of the year had
been dampened by one-off factors.
As a result, the third-quarter figures should not be interpreted
as a big economic rebound, they added.
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.
The ONS emphasised that growth in the April-to-June period had
been hindered by factors such as the extra bank holiday for the
royal wedding.
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.
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GDP
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There are three main ways of calculating GDP - through output,
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Glossary in full "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."
The EEF engineering employers' group also drew some comfort from
the ONS figures.
EEF chief executive Terry Scuoler said: "Despite the seemingly
endless stream of gloomy news from Europe, the UK economy seems to
have weathered the turbulent summer months.
"Today's modest figures are better than expected, but global
challenges are growing, confidence is fragile and investment plans
remain on hold."
But concerns about the UK economy were not helped by latest
Markit Purchasing Managers' Index data, also released on
Tuesday.
Continue reading the main story “
Start Quote
There's an important debate now raging among economists about how
much of the output lost since 2007 will ever be made
up”
End Quote
Stephanie Flanders
Economics editor
--------------------------------------------------------------------------------
Read more from Stephanie
The index for manufacturing activity in October fell to 47.4
points, from 50.8 points in September. Any reading above 50
indicates expansion.
Rob Dobson, senior economist at Markit, said: "The UK
manufacturing PMI fell sharply back into contraction territory in
October.
"The most worrying aspect of the survey is the trend in new
orders, which declined at the quickest pace since March 2009.
Companies are facing tough conditions in both domestic and overseas
markets, meaning that output is increasingly being sustained
through the depletion of backlogs of work.
"A marked recovery in the replenishment rate of order books is
needed to prevent the renewed manufacturing downturn becoming
embedded," Mr Dobson said.
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