UK Analysis: Q2 GDP Confirmed at+0.3%; Spending Slows>

-UK Q2 Household Consumption +0.1%, slowest since Q4 2014

-UK Q2 Business Investment flat q/q vs +0.6% in Q1

-UK Q2 Services +0.5%, in line with previous estimate

     By Laurie Laird and Jamie Satchithanantham 

     London (MNI) - UK economic growth accelerated modestly in the 

second quarter, confirming data released a month ago, but household 

spending slowed to its slowest pace in more than two years. 

     Gross domestic product increased by 0.3% in three months to June, 

in line with the MNI median forecast, matching the originally-reported 

gain, a modest pick up from the 0.2% pace recorded in the first quarter 

of 2017. 

     On an annual basis, output rose by 1.7%, in line with the MNI 

median, also matching the result reported last month. Over the first six 

months of the year, the economy expanded by 0.7%, the slowest first-half 

growth since the opening six months of 2012 when it grew by 0.5%. 

     Thursday's data provided a first look at the expenditure components 

of economic activity. 

     Household consumption, which comprises just under two-thirds of 

GDP, increased by just 0.1% in the second quarter, down from growth of 

0.4% in the previous period, to account for 0.1 percentage points of 

total growth. That's the slowest pace of growth since the final quarter 

of 2014, when spending slipped by 0.1%. 

     Business investment was unchanged between the first and second 

quarters, confounding forecasts of a sharp fall in the wake of the vote 

to leave the European Union. However, the flat result was down from a 

0.6% increase in the first quarter. 

     As suggested by monthly export and import data, net trade exerted a 

neutral effect on GDP. Exports increased by 0.7% over the second 

quarter, while imports climbed by the same amount. 

     Government spending rose by 0.6%, down from a 0.7% rise in the 

opening three months of the year, adding 0.1 percentage point to total 

growth. 

     The output components were largely unchanged from 

previously-released data, with the exception of industrial production, 

which contracted by slightly less than reported earlier this month. 

     Industrial output fell by 0.3% in the second quarter, improving on 

the 0.4% fall reported in the sector report. As a result, industrial 

production, which comprises 14.9% of GDP, exerted a neutral effect on 

total growth. 

     Service sector growth accelerated to 0.5% in the second quarter, 

accounting for 0.4 percentage points of total growth, in line with the  

0.5% gain contained in the early estimate of GDP released last month. 

     Output of services expanded by 0.4% between May and June, according 

to a separate report released on Thursday, below the median MNI forecast 

of a 0.5% gain. The Office for National Statistics had estimated a 0.3% 

gain in June when deriving the first estimate of GDP. Services account 

for 78.8% of total output. 

     A 6.7% increase in motion picture activity accounted for a large 

portion of growth in second quarter service output, contributing 0.07 

percentage points to total service sector growth. 

     The construction sector contracted by 1.3% in the second three 

months of the year, matching the decline reported earlier in the month, 

shaving growth by 0.1 percentage points. Construction comprises 5.9% of 

economic output. 

     The second estimate of GDP growth, as released on Thursday, draws 

upon hard data for between 50% and 60% of calculations, with the balance 

comprised of estimates, according to a National Statistics official. 

-London bureau: 44 (0) 203 865 3812; email: ukeditorial@marketnews.com

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