Today's GDP release shows momentum building

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Today's first estimate of GDP brings yet more positive news and shows that growth across the UK economy has picked up again in the third quarter of this year.

The economy grew 0.8% in 2013q3.

This is the third consecutive quarter of growth and is the strongest run of data we have seen for three years. As the chart below shows, all the major economic sectors – Agriculture, Services, Construction and Manufacturing – posted growth and we have now had two quarters in a row with a clean sweep of positive numbers.

All parts of the economy growing% change in outputSource: National Statistics

Manufacturing also now seems to have some real pick up and go with the recent expansion the fastest we have seen since the third quarter of 2010.

Manufacturing grew 0.9% in 2013q3 for the second consecutive quarter.

This suggests the monthly contraction in manufacturing output of 1.2% in August was fully reversed in September.

Survey evidence in recent months has been pointing to momentum in the sector picking up. EEF's latest Business Trends Survey showed manufacturers had experienced a sharp rebound in output balances for the third quarter of this year, as shown in the chart below. Expectations for the three months ahead remain strong and we are expecting to see the sector continue to post positive quarterly growth through over the next 18 months.

Official statistics lining up with survey evidence% balance of change in past three months (lhs), % change on a year ago (rhs)Source: National Statistics, EEF Business Trends Survey

It is particularly encouraging to see some momentum building behind these quarterly growth figures following the on-off recovery that has plagued the economy and the manufacturing sector over the past few years. We want to see this momentum sustained.


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