A strong performance from the service sector – partly offset by continued weakness in construction – meant gross domestic product grew by 0.3% in the first quarter of 2013, which was better than the 0.1% consensus. The risk was always there that the Office for National Statistics would have surprised us with a really bad number.
That 0.3% rise was made up of a 0.6% increase in services, a 0.2% rise in production (helped by a bounce-back in North Sea output) and a 2.5% drop in construction. Service sector output is now above pre-crisis levels, while manufacturing and construction remain well down.
Cold weather had no overall impact on the numbers, according to the ONS, weaker retail activity in January and March being offset by higher consumption of electricity and gas as we shivered.
The 0.3% rise makes the arithmetic for 2013 growth look interesting, following recent downward revisions to forecasts. If GDP stays at its Q1 level, the economy will have grown by 0.5% (2013 over 2012). Even modest GDP rises over the remaining quarters will give higher growth. And now, the triple-dip having been avoided, the next point of interest will be if and when the ONS revises away the double-dip. It has already gone from the data on the expenditure measure of GDP. More here on today’s data.
This piece is cross-posted from David Smith’s Economics UK with permission.