Investment - Articles - Azad Zangana comments on UK economy growth of 0.6%


Schroders European Economist, Azad Zangana, comments on today's UK GDP estimate:

 "The Office for National Statistics estimates the UK economy to have grown by 0.6% in the three months to June 2013 – twice the pace of the growth in the previous three months. The results are in line with city expectations, along with our own forecast. Within the details, almost 70% of the GDP growth seen in the second quarter came from the services sector. Production, including manufacturing, grew by 0.6%, while the construction sector also grew by 0.9%."
 
 "The estimates released today are preliminary, and may be revised up or down. However, it appears that the economic recovery is broadening out, with every major sub-sector making a positive contribution.
 
 "Looking ahead, we expect growth to ease back in the third quarter as the build-up in inventories is not matched by rising domestic demand in the near term. Monthly data suggests the peak in output was back in March, but the impact was only fully recorded in the second quarter data published today. Since then, industrial production and services output has been growing at a more muted pace.
 
 "The Bank of England, which is currently considering the next evolution in monetary policy, has a challenge in deciding whether the latest data supports the view that the economy is now strong enough to continue its recovery without more monetary stimulus, or whether the headwinds of public sector austerity and household deleveraging require monetary activism to offset some of the downside

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