United Kingdom: GDP rebounds modestly after fourth quarter contraction
April 27, 2011
In the first quarter, GDP grew 0.5% over the previous quarter in seasonally adjusted terms, according to preliminary data released by the Office for National Statistics (ONS) on 27 April. The print was broadly in line with Consensus Forecast panellists' expectations of a 0.6% increase but came in below projections from the Office for Budget Responsibility (OBR), which had the economy expanding a more meaningful 0.8%. In the fourth quarter, the economy contracted 0.5%, dragged down by adverse weather conditions. Diminished output as a result of temporary disruptions, such as natural disasters or adverse weather, usually boosts growth in the following quarters, as businesses compensate for delayed production when conditions return to normal. Consequently, the first quarter's relatively weak print underscores the fragile state of the British economy, as it merely reversed the contraction observed in the previous quarter. That said, the rebound was mainly underpinned by a positive developments in the services sector, which swung from a 0.6% contraction in the previous quarter to a 0.9% expansion in the first. Meanwhile, the less significant industrial sector decelerated to a 0.4% increase (Q4 2010: +0.8% quarter-on-quarter), whereas growth in agriculture picked up to 0.6% (Q4 2010: +0.1% qoq). Only the construction sector recorded a decline, deteriorating further from the fourth quarter's 2.3% decrease to a 4.7% contraction.