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| UK economic growth rises to 0.6% in second quarter | UK economic growth rises to 0.6% in second quarter |
| (35 minutes later) | |
| The UK economy grew by 0.6% in the three months to June, according to official figures. | The UK economy grew by 0.6% in the three months to June, according to official figures. |
| The figure was in line with market expectations, and is up from 0.3% growth in the previous quarter. | The figure was in line with market expectations, and is up from 0.3% growth in the previous quarter. |
| Output grew in all of the construction, manufacturing and services sectors the Office for National Statistics said. | Output grew in all of the construction, manufacturing and services sectors the Office for National Statistics said. |
| It is the first estimate for growth during the second quarter of 2013, and is based on about 44% of actual data on economic activity. | It is the first estimate for growth during the second quarter of 2013, and is based on about 44% of actual data on economic activity. |
| "These figures are better than forecast," said Chancellor George Osborne. "Britain is holding its nerve, we are sticking to our plan, and the British economy is on the mend - but there is still a long way to go and I know things are still tough for families." | "These figures are better than forecast," said Chancellor George Osborne. "Britain is holding its nerve, we are sticking to our plan, and the British economy is on the mend - but there is still a long way to go and I know things are still tough for families." |
| The shadow chancellor, Ed Balls, welcomed the growth figure "after three wasted and damaging years of flat-lining", but warned that "families on middle and low incomes are still not seeing any recovery in their living standards" because wage rises were failing to keep up with increases in prices. | The shadow chancellor, Ed Balls, welcomed the growth figure "after three wasted and damaging years of flat-lining", but warned that "families on middle and low incomes are still not seeing any recovery in their living standards" because wage rises were failing to keep up with increases in prices. |
| Broad-based recovery | Broad-based recovery |
| The figures mean that the economy has now recouped almost half of its total 7.2% contraction during the 2008-09 recession, with output remaining 3.3% below its pre-recession peak. | The figures mean that the economy has now recouped almost half of its total 7.2% contraction during the 2008-09 recession, with output remaining 3.3% below its pre-recession peak. |
| The growth figure reflects the seasonally-adjusted increase in output in the second quarter of the year, compared with the first quarter. Compared with the second quarter of 2012, gross domestic product grew by 1.4%. | The growth figure reflects the seasonally-adjusted increase in output in the second quarter of the year, compared with the first quarter. Compared with the second quarter of 2012, gross domestic product grew by 1.4%. |
| The recovery was unusually broad-based, with the agriculture and production sectors both turning in positive growth, alongside services and construction. | The recovery was unusually broad-based, with the agriculture and production sectors both turning in positive growth, alongside services and construction. |
| The services sector grew 0.6% in the three-month period, compared with the previous quarter, and was just 0.2% below the peak level it recorded in early 2008. | The services sector grew 0.6% in the three-month period, compared with the previous quarter, and was just 0.2% below the peak level it recorded in early 2008. |
| The sector is the largest component of the UK economy - constituting about 80% of output - and made the largest contribution to the overall growth figure. | The sector is the largest component of the UK economy - constituting about 80% of output - and made the largest contribution to the overall growth figure. |
| Within services, business was particularly strong in the hotels, restaurants and distribution according to the ONS, expanding 1.5% in the quarter, on top of 1.2% growth in the first three months of the year. | Within services, business was particularly strong in the hotels, restaurants and distribution according to the ONS, expanding 1.5% in the quarter, on top of 1.2% growth in the first three months of the year. |
| Construction bounced back 0.9%, but still remains 16.5% below its peak, after the sector experienced a second sharp slump early last year. | |
| Meanwhile manufacturing was up 0.4%, but is still 10.2% short of its pre-recession level. | |
| Manufacturing had experienced a modest rebound up until late 2010, but has steadily declined in almost every quarter since then, in large part due to weak demand from the crisis-struck eurozone. | |
| "For manufacturing, this should signal the start of a gradual improvement in output and orders books through the rest of this year," said Lee Hopley, chief economist at the manufacturers trade body, EEF. | |
| "Indeed better news on eurozone activity this week gives further cause for a bit of optimism for manufacturers and exporters but, importantly, we need to see output growth followed by a turnaround in business investment in the coming quarters." | |
| Low interest rates | |
| The growth figure was in line with market expectations, and share prices on the London Stock Exchange did not react to the news. | The growth figure was in line with market expectations, and share prices on the London Stock Exchange did not react to the news. |
| However, the pound did drop just under half a cent against the dollar to $1.533, indicating that some market participants believed the data may support further monetary intervention by the Bank of England. | |
| The Bank is next due to discuss monetary policy on 1 August. | The Bank is next due to discuss monetary policy on 1 August. |
| Of potentially greater significance will be the publication of the next inflation report on 7 August, which is when the Bank has said it will begin issuing "forward guidance" - a soft commitment as to how long it will keep interest rates at their current historic low of 0.5%. | Of potentially greater significance will be the publication of the next inflation report on 7 August, which is when the Bank has said it will begin issuing "forward guidance" - a soft commitment as to how long it will keep interest rates at their current historic low of 0.5%. |
| "This isn't a figure that should be shouted from the rooftops by any means," said Richard Driver, currency market analyst at Caxton FX. "But given where we have been and where most other global economies are now in terms of economic growth, it is more than satisfactory. | |
| "It should be enough to deter the [Monetary Policy Committee] from doing more quantitative easing over the coming months. A long-term commitment to low interest rates should be enough for the BoE at current growth levels. | |
| "The challenge now is to maintain this pace of growth in the second half of the year and the prospects look highly uncertain in this regard.'' |