United Kingdom: Anaemic Q1 GDP growth confirmed by second estimate
May 25, 2011
In the first quarter, GDP added a seasonally adjusted 0.5% over the previous quarter, according to a second estimate released on 25 May. The reading was unrevised from the preliminary data released by the Office for National Statistics (ONS) on 27 April. In the fourth quarter, GDP declined by 0.5% as a result of adverse weather conditions that constrained the actual output of the economy. Consequently, the UK economy remained stagnant since the third quarter of 2010. The first quarter's expansion mainly reflected an improvement in the external sector whereas the domestic side of the economy remained subdued. Private consumption declined 0.6% (Q4 2010: -0.3% qoq) and fixed investment contracted 4.4% (Q4 2010: -1.8% qoq), partly offset by a 1.0% expansion in government consumption. Exports of goods and services continued to recover and expanded 3.7% in the first quarter, while imports fell 2.3%, confirming the weak conditions existing within the domestic market. As a result, the net contribution of the external sector to overall growth improved from negative 0.5 percentage points in the fourth quarter to positive 1.7 percentage points in the first. At the sector level, positive developments in the services sector helped to lift the economy in the first quarter. Growth in services amounted to 0.9% over the previous quarter in Q1, which contrasted a 0.6% contraction observed in the fourth quarter. The industrial sector expanded 0.2% over the previous quarter (Q4 2010: 0.8% qoq). The construction sector continued to be a major drag on growth, declining 4.0%.