UK growth and household income revised higher in second-quarter data
Revised official figures show UK GDP grew 0.5% in the second quarter, up from an earlier estimate of 0.4%, while household income per head rose 1.1% in the first half of the year. Markets reacted positively, though stronger growth could complicate interest-rate decisions amid above-target inflation.
Revised official figures have shown that the UK economy grew faster than previously estimated in the second quarter, while household income per head also increased during the first half of the year. The Office for National Statistics said gross domestic product rose by 0.5% between April and June, compared with an earlier estimate of 0.4%. The economy had expanded by 0.6% in the first quarter, meaning growth in the first six months matched that of the United States, according to the report.
Household income per head increased by 1.1% between January and June. The savings rate also rose, from 8.6% in the first quarter to 8.8% in the three months to the end of June. Business investment grew by 1.8% in the second quarter and was estimated to be 5.2% higher than in the same quarter a year earlier.
Analysts attributed the stronger figures to services growth, household spending, investment and improved trade, although the supplied material also includes speculative comments about a possible confidence effect linked to domestic politics. Thomas Watts of Julius Baer described the figures as positive news for the government. Kathleen Brooks of XTB said the revisions suggested resilience despite the effects of conflict, higher energy prices and increased borrowing costs.
The source material contains references to conflict in the Middle East and Iran but does not provide independent detail on those developments. The upgrade is politically significant for Chancellor John Healey ahead of his first budget next month. Markets reacted positively, with sterling reaching a six-week high against the euro and rising 0.4% against the US dollar to $1.3292.
Two-year UK government bond yields fell to 4.86%, while 10-year yields declined to 5.356%. Traders considered whether stronger growth could persuade the Bank of England that the economy was running too strongly and required higher interest rates. Inflation was reported at 3.1%, above the Bank’s 2% target.
The revised growth figures therefore offer support for the economy but may increase the policy challenge facing the central bank.
This independently written report is based on information supplied by the named publisher. Vertrix News has not independently verified the source report.