Roundup: British GDP growth unrevised at 0.7 pct, exports surges

British gross domestic product (GDP) grew by 0.3 percent between the first quarter and the second quarter of 2015, unrevised from the previous as well as the first estimate that was published a month ago, said the Office for National Statistics (ONS) Friday.

Exports growth lifted the economic performance of the period.

The quarterly growth pace was bigger than the 0.6 percent in the first quarter of 2014, and in line with the market expectation consensus. Britain's GDP has now increased for 10 consecutive quarters.

NET EXPORT INCREASES

Data showed that British production output rose by 0.7 percent in Q2 2015 when compared with the three months earlier. Services and construction sector outputs increased by 0.7 percent and 0.2 percent respectively, while agricultural outputs decreased by 0.1 percent over the same period.

In expenditure terms, British household expenditure in Q2 2015 grew by 0.7 percent when compared with the three months earlier. General government final consumption expenditure increased by 0.9 percent, but gross capital formation dropped by 5.2 percent, figures showed.

Business investment grew by 2.7 percent in Q2 2015, better than the previous quarter's increase of 2.0 percent. Exports and net exports grew by 3.9 percent and 0.6 percent respectively, data also showed. And in terms of contribution to growth, net trade in Q2 lifted the economic growth by 1.0 percentage points.

Compared with the same quarter a year ago, British GDP was 2.6 percent higher in Q2, unrevised from the previous published estimate. The UK economy increased by three percent in 2014, its best result since 2006, data showed.

GDP per capita in volume terms was estimated to have increased by 0.5 percent between Q1 2015 and Q2 2015. Between 2013 and 2014, British GDP per head increased by 2.3 percent, said ONS.

The British statistics department releases three estimates for its quarterly GDP data.

INTEREST RATE BET

Experts here have raised their expectation on British economic growth or inflation forecast due to Friday's GDP figures.

The Warwick Business School said its forecasting system, or WBSFS, has revised upwards the probability that inflation will return to around its two percent target level in 2016 following Britain's revised second quarter remaining at 0.7 percent growth.

Anthony Garratt, professor at Warwick Business School, said: "Despite the recent market turmoil, economic prospects for 2015 and 2016 remain strong, with a 45 percent probability of GDP growth exceeding three percent in 2016."

Official data showed that Britain's Consumer Prices Index (CPI) rose by 0.1 percent in the year to July 2015, compared with zero percent growth in the year to June 2015.

Martin Beck, senior economic advisor to the EY ITEM Club, commented in a note that the most striking element of the expenditure breakdown was a sizeable contribution to GDP from net trade, which added a whole percentage point to output.

The London-based economic forecaster is sticking to its estimation that British GDP should grow by at least 2.7 percent in 2015 as a whole.

Regarding the benchmark interest rate expectation, Beck said although the price of oil has seen some recovery in recent days, in sterling terms, it remains some 20 percent down on its level only two months ago.

The drag on inflation from this source will boost households' spending power and is one reason why the British central bank is unlikely to raise interest rates until well into 2016, he noted. Endit