UK economy grows 0.6% in second quarter

15th Aug 2024 07:32

(Sharecast News) - The UK economy grew 0.6% in the second quarter, down slightly on 0.7% growth in the first quarter but in line with expectations, according to data released on Thursday by the Office for National Statistics.

The figures also revealed that on a monthly basis, the economy showed no growth in June, as expected.

Liz McKeown, director of economic statistics at the ONS, said: "The UK economy has now grown strongly for two quarters, following the weakness we saw in the second half of last year.

"Growth across the three months was led by the service sector, where scientific research, the IT industry and legal services all did well.

"In June growth was flat with services falling, due to a weak month for health, retailing and wholesaling, offset by widespread growth in manufacturing."

Ashley Webb, UK economist at Capital Economics, said: "Overall, today's release doesn't change our view that the Bank will keep interest rates on hold at 5.00% at the next policy meeting in September.

"But with the timely PMI data suggesting GDP growth slowed at the beginning of Q3, at the margin this lends a bit more support to our view that interest rates will be cut twice more this year, to 4.50%."

Figures released by the ONS on Wednesday showed that consumer price inflation rose in July for the first time since December, but less than expected.

CPI rose by 2.2%, up from 2% in June and May but coming in below expectations of 2.3%. It is now back above the Bank of England's 2% target.

The ONS said the largest upward contribution came from housing and household services where prices of gas and electricity fell by less than they did last year. The largest downward contribution came from restaurants and hotels, where prices of hotels fell this year having risen last year.

The data also showed that core CPI - which strips out food, energy, alcohol and tobacco - fell to 3.3% in July from 3.5% in June.

Meanwhile, the CPI services annual rate fell to 5.2% in July from 5.7% a month earlier.