According to the Office for National Statistics (ONS) the UK economy grew by 0.4% in Q2 2018 (quarter on quarter). This follows on from what was widely regarded as a lack-lustre Q1 growth figure of 0.2%.
The ONS also calculates “quarterly” growth for a three-month consecutive run of data providing a running “quarterly” average (traditionally, the economic year is divided into four quarters commencing in January, April, July, and October). This gives a snapshot of the direction of travel for the economy.
With this definition in mind, the ONS has said that growth for the 3-month period ending with July’s data (i.e. until the end of July) growth in the UK economy picked up to 0.6%. The improved GDP position has been attributed to a boost in the retail sector’s performance which, it claims, was due to a particularly hot summer and the remarkable spectacle of England’s football team doing well in the World Cup tournament (they came fourth!).
The ONS’s Rob Kent-Smith noted: "Services grew particularly strongly, with retail sales performing well, boosted by warm weather and the World Cup. The dominant service sector again led economic growth in the month of July with engineers, accountants and lawyers all enjoying a busy period, backed up by growth in construction, which hit another record high level."
The nation’s industrial output declined, but this was offset by improvement in the construction sector. The ONS put economic growth for July itself at 0.3% - the 0.6% growth figure for the tree-month period represents the fastest growth for a year. However, the factors cited for July’s boost are unique (a good UK summer and the national team doing passably well at a major tournament!) and will not play a role going forward.
The data may be seen as a vindication of the Bank of England’s decision to raise interest rates in August (to 0.75%). The Bank is meeting again this week and is widely expected to leave rates untouched.