The UK's Office for National Statistics (ONS) has confirmed that the the economy grew by 0.7 percent from April to June, unchanged from its earlier estimate. However construction, which has been languishing since 2010 and is seen as a bell-wether for the economy, and manufacturing both clocked up the fastest quarterly growth since the middle of 2010. Construction output went up by 1.9 percent and manufacturing by 0.9 percent, demonstrating a real revival of business confidence. These two key sectors were revised upward by the ONS from earlier estimates of 1.4 and 0.7 respectively.
An increase in wages, linked to an upturn in the housing market, is a positive indicator for continued growth in the coming months. It will encourage consumer spending and give a boost to the service sector, which rose at an unrevised rate of 0.6 percent.
The single least encouraging aspect of the figures released concerned business investment, which fell by £786 million, down 2.7 percent. Nevertheless the figures are an indication that Britain is on track for more sustainable growth through the remainder of 2013 and into 2014.
With this in mind, the Bank of England (BoE) has recently been giving out signals that it believes the first signs of a more sustainable recovery are strong enough to consider raising interest rates or loosen quantitative easing policies at some point. Though this won't happen until the recover is better established, one external member of the BoE Monetary Policy Committee (MPC) David Miles said that he was now “more confident that we are on path to recovery than at any time since I joined the MPC in the first part of 2009.”
