UK grows 0.6% in Q2Newsflash: The UK economy grew by 0.6% in the second quarter of the year, as it continues to pull away from last year’s shallow recession.
That’s a slight slowdown on the first quarter, where the economy expanded by 0.7%, but still a healthy growth rate – and in line with expectations.
The Office for National Statistics reports that the services sector drove growth, while the production sector and construction both shrank slightly.
GDP is estimated to have grown 0.6% in Quarter 2 (Apr to June) 2024, following growth of 0.7% in Quarter 1 (Jan to Mar).
Services (+0.8%) grew while production (-0.1%) and construction (-0.1%) both contracted.
Read GDP first quarterly estimate, UK ➡️ t.co/h1NTYmpipY pic.twitter.com/cOj8VlAp6x
— Office for National Statistics (ONS) (@ONS) August 15, 2024Compared with a year ago, real GDP is estimated to have increased by 0.9%.
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Election uncertainty and strikes may have hit growth in JunePre-election uncertainty, and industrial action, may both have weighed on the economy in June.
The Office for National Statistics says anecdotal evidence from businesses suggests some clients were reluctant to place orders until they knew who had won the election.
That could have contributed to the lack of growth in June.
The ONS says:
Comments provided for June 2024 suggested some industries may have been affected by the general election held on 4 July 2024. In a range of industries across the economy, businesses stated that customers were delaying placing orders until the outcome of the election was known. These comments covered all of manufacturing, construction, and services.
A strike by junior doctors in late June, and the impact of last year’s Hollywood strikes, could also have hit activity.
The ONS adds:
While perhaps not as frequently mentioned as in recent months, industrial action in certain industries was also cited as a possible reason for reduced output.
This was stated as a reason for reduced output in human health with the junior doctors strikes towards the end of June, and in TV and film production where the Screen Actors Guild strikes in America in 2023 are still affecting UK production schedules.
Path for UK interest rate cuts ‘looks to be set’The UK economy is in ‘good health’, says Neil Birrell, chief investment officer at Premier Miton Investors:
Following this morning’s Q2 GDP report, Birrell says:
“The second quarter seems like a long time ago, but the GDP data confirms that the UK economy is in good health. The Bank of England is in the nice position, unlike other central banks, of having a level of surety in the data it is seeing, when setting policy.
With inflation playing ball as well, the path to lower interest rates looks to be set, the timing of the cuts is now the focus.”
GDP per head lower than a year agoWhen you adjust for population changes, growth was less vigorous
The ONS reports that real GDP per head is estimated to have increased by 0.3% in Quarter 2 2024 – only half as fast as the headline growth rate for the quarter.
Real GDP per head is 0.1% lower compared with the same quarter a year ago.
GDP per head, or per capita, is commonly used as a broad measure of average living standards or economic well- being.
The UK economy has finally shaken off its slumber of recent years, says Ben Jones, lead economist at the CBI:
“After a strong performance in May, a slowdown in GDP growth was always on the cards for June. But a second successive quarter of above-trend growth suggests the UK economy has finally shaken off its slumber of recent years.
“We think the quarterly data probably overstates the underlying momentum in the economy, with recent CBI surveys of activity remaining fairly subdued. But firms nonetheless appear confident that the recovery will continue.
“After a challenging, few years, and ahead of the Autumn budget, the focus is shifting to the steps needed to raise the UK’s growth rate over the long-term. This could include the reforms set out in our recent business tax roadmap, which can incentivise private investment and together with a Net Zero Investment plan boost green growth, one of the fastest growing sectors in the country.”
This chart shows how the economy has hauled itself back to growth this year, after a grim 2023:
UK quarterly GDP growth rates Photograph: ONSBut, our economics correspondent Richard Partington points out that this year’s growth follows “a lacklustre performance over the past decade, while high living costs, elevated interest rates, and faltering productivity gains keep a lid on momentum”.
The chancellor, Rachel Reeves, has targeted rebooting the economy as Labour’s No 1 priority, arguing that stronger growth would help boost living standards and raise more tax revenue to repair battered public services.
More here:
ONS: UK economy has now grown strongly for two quartersThe UK has now grown “strongly” for two quarters in a row, says ONS director of economic statistics Liz McKeown:
“The UK economy has now grown strongly for two quarters, following the weakness we saw in the second half of last year.
“Growth across the three months was led by the service sector, where scientific research, the IT industry and legal services all did well.
“In June growth was flat with services falling, due to a weak month for health, retailing and wholesaling, offset by widespread growth in manufacturing.”
Economy stagnated in JuneToday’s GDP report also shows the economy did not grow in June.
GDP showed no change in June, the Office for National Statistics reports, following growth of 0.4% in May.
Digging into the details… services output fell by 0.1% in June, while production output grew by 0.8% in the month, and construction output grew by 0.5%
UK grows 0.6% in Q2Newsflash: The UK economy grew by 0.6% in the second quarter of the year, as it continues to pull away from last year’s shallow recession.
That’s a slight slowdown on the first quarter, where the economy expanded by 0.7%, but still a healthy growth rate – and in line with expectations.
The Office for National Statistics reports that the services sector drove growth, while the production sector and construction both shrank slightly.
GDP is estimated to have grown 0.6% in Quarter 2 (Apr to June) 2024, following growth of 0.7% in Quarter 1 (Jan to Mar).
Services (+0.8%) grew while production (-0.1%) and construction (-0.1%) both contracted.
Read GDP first quarterly estimate, UK ➡️ t.co/h1NTYmpipY pic.twitter.com/cOj8VlAp6x
— Office for National Statistics (ONS) (@ONS) August 15, 2024Compared with a year ago, real GDP is estimated to have increased by 0.9%.
This morning’s data will be the first estimate of GDP in June, rounding off the second quarter of the year.
But previous monthly data has shown that the economy flatlined in April, before growing by 0.4% in May – which was seen as an early boost for the Labour government.
Introduction: UK GDP in focusGood morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
How strongly, or weakly, was the UK economy growing at the end of Rishi Sunak’s premiership?
We’ll find out shortly, when GDP data for June – and for the second quarter of 2024 – are released.
City economists predict the UK posted a quarter of solid growth. GDP is forecast to have grown by 0.6% in April-June, which would be a slight slowdown on the 0.7% recorded in January-March.
But in June alone, the economy may have stalled – with no growth forecast.
Sanjay Raja, chief UK economist at Deutsche Bank, says the service sector was driving activity in the last quarter:
On our calculations, the services economy will likely bounce up by 0.7% q-o-q – despite expected contractions in both the production and construction sectors over the same quarter.
On the expenditure side, we expect government spending, business investment, inventories, and net acquisitions to provide the bulk of the lift to quarterly GDP.
The strength – or otherwise – of the UK economy will also influence how soon the Bank of England feels confident to cut interest rates again, after inflation rose by less than expected in July:
The agenda 7am BST: UK GDP report for June
7am BST: UK trade report for June
7am BST: UK GDP report for Q2 2024
9am BST: Norwegian central bank interest rate decision
9.30am BST: UK labour productivity statistics
1.30pm BST: US weekly jobless claims
1.30pm BST: US retail sales for July