UK economic growth revised upwards

Quarterly National Accounts, Q2 2014

  • UK gross domestic product (GDP) in volume terms was estimated to have increased by 0.9% between Q1 2014 and Q2 2014, revised up 0.1 percentage points from the second estimate of GDP published on 15 August 2014.
  • Annual GDP in volume terms was estimated to have increased by 1.7% in 2013, compared with 2012, unrevised from the estimate published on 15 August 2014.
  • Between Q2 2013 and Q2 2014, GDP in volume terms increased by 3.2%, unrevised from the previously published estimate.
  • GDP in current prices was estimated to have increased by 1.9% between Q1 2014 and Q2 2014.
  • The peak to trough fall of the economic downturn in 2008/2009 is now estimated to be 6.0%. Previously this was estimated to be 7.2%.
  • In Q2 2014, GDP was estimated to have been 2.7% higher than the pre-economic downturn peak of Q1 2008, having first exceeded this peak in Q3 2013.
  • The household saving ratio was estimated to be 6.7% in Q2 2014
  • Real household disposable income increased by 2.2% between Q1 2014 and Q2 2014

Growth – GDP increase of 0.8%

Gross Domestic Product Preliminary Estimate, Q2 2014: ONS

  • GDP increased by 0.8% in Q2 2014, the second consecutive quarter on quarter increase of 0.8%.
  • Output increased in two of the four main industrial groupings within the economy in Q2 2014 compared with Q1 2014. In order of their contribution, output increased by 1.0% in services and by 0.4% in production. However, output decreased by 0.5% in construction and by 0.2% in agriculture.
  • In Q2 2014 GDP was estimated to be 0.2% above the peak in Q1 2008. From peak to trough in 2009, the economy shrank by 7.2%.
  • GDP was 3.1% higher in Q2 2014 compared with the same quarter a year ago.

Retail sales increase – highest year-on-year growth

Retail Sales, April 2014: ONS

  • In April 2014, the quantity bought in the retail industry increased by 6.9% compared with April 2013 and by 1.3% compared with March 2014. This was the highest year-on-year growth in the quantity bought since May 2004 and continued a pattern of year-on-year growth since early 2013.
  • The underlying pattern, as expressed by the rolling three-month-on-three month growth rate, was one of growth, with the quantity bought increasing by 1.8%.  This was the highest since March 2004 and was the 14th consecutive month of three month-on-three month growth in the quantity bought.
  • With the exception of petrol stations, all stores saw year-on-year increases in sales volumes.  Notably the food sector posted its strongest year-on-year growth since January 2002, increasing by 6.3%. Feedback from food store retailers suggested that a better than expected Easter and better weather conditions helped to boost sales.
  • Food store retailers also suggested that promotions helped to boost sales and this was reflected in the slowing of average price growth in the food sector: consistent with the consumer prices index (CPI) published on 20 May 2014, the rate of food store price inflation decreased to 0.9%, down from 1.8% in March 2014.  Food stores provided the main contribution to the fall in the all retail rate of store price inflation, which fell by 0.6% in April 2014.
  • In April 2014, the amount spent in the retail industry increased by 6.2% compared with April 2013 and by 0.6% compared with March 2014.  Non-seasonally adjusted data show that the average weekly spend in the retail industry in April 2014 was £7.0 billion compared with £6.5 billion in April 2013 and £6.8 billion in March 2014.
  • Following a weak March, the amount spent online increased by 13.3% in April 2014 compared with April 2013 and by 2.6% compared with March 2014

European GDP up

European GDP up, Q1: Eurostat

  • Seasonally adjusted GDP rose by 0.2% in the euro area (EA18) and by 0.3% in the EU28 during the first quarter of 2014, compared with the previous quarter.
  • In the fourth quarter of 2013, GDP grew by 0.2% in the euro area and by 0.4% in the EU28.
  • Compared with the same quarter of the previous year, seasonally adjusted GDP rose by 0.9% in the euro area and by 1.4% in the EU28 in the first quarter of 2014, after +0.5% and +1.0% respectively in the previous quarter.

Upgraded growth forecast from BCC

Upgraded growth forecast from BCC

  • The British Chambers of Commerce (BCC) has upgraded its growth forecasts for the next two years – from 2.7% to 2.8% in 2014 and from 2.4% to 2.5% in 2015.
  • UK GDP expected to exceed  its pre-recession peak in Q2 2014 – one quarter earlier than forecast in December
  • UK GDP quarterly growth is forecast at 0.7% in Q1 2014, easing slightly to 0.6% in Q2 2014, before averaging 0.6% per quarter until the end of 2016.
  • The first increase in UK interest rates expected in Q3 2015 to 0.75%
  • Wage growth predicted to exceed inflation from mid-2014
  • The youth unemployment rate is expected to remain almost three times the national average over the forecast period (2014 – 2016)
  • Unemployment rate expected to fall from 7.2% in Q4 2013 to 6.0% in Q4 2016
  • Growth in 2016 expected to be 2.5%.