UK economy grows by 0.2% in Q1 after second estimate of 0.1%

The quarterly national accounts reveal that the UK economy has grown by 0.2% in Q1 2018, revised up from the second estimate of 0.1%.

In the most recent quarter, the revisions to the measure of GDP have been driven by methodical changes to improve the quality of early estimates of construction output.

Furthermore, the expenditure measure of GDP shows that private consumption, government consumption and net trade all contributed positively to growth in Q1 2018, while gross capital formation made zero contribution, the Monthly economic commentary: June 2018 published by the Office for National Statistics (ONS) said.

Commenting on the GDP figures, head of GDP Rob Kent-Smith said: “GDP growth was revised up slightly in the first three months of 2018, with later construction data, and significantly improved methods for measuring the sector, nudging up growth.

“These improved methods, introduced as part of ONS’s annual update to its figures, will lead to better early estimates of the construction sector with smaller revisions in the future.”

The report also revealed that households’ saving ratio fell to 4.1% in Q1 2018 as households continue to be net borrowers.

Despite this, employment levels increased by 146,000 compared with the three months to January 2018 to a record high of 32.39 million.

However, the 12-month growth rate of the Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose to 2.3% in May 2018, from 2.2% in April 2018. Furthermore, the input Producer Price Index (input PPI) grew by 9.2% in the 12 months to May 2018, an increase from the 5.6% in 12 months to April 2018, while the output Producer Price Index (output PPI) rose by 2.9% in the year.

“Overall, households were borrowers at the beginning of 2018 and for the sixth consecutive quarter, as households continued to face increasing prices, squeezing their budgets,” Kent-Smith said.

“Investment by both local and central government and the private sector fell, with spending on buildings, machinery and software all seeing notable falls.”

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