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GDP growth slows to 0.5% as construction output slumps

  • 27/10/2015
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GDP growth slows to 0.5% as construction output slumps
Growth in UK gross domestic product (GDP) has dropped to +0.5% in the third quarter, against +0.7% in the second quarter, initial estimates published by the Office for National Statistics (ONS) data show.

A slowdown in the UK’s economy comes as output in the construction industry declined by 2.2% compared to 1.4% in the previous quarter and growth of 1.7% during the same period last year.

Despite this, the ONS data showed that GDP is still 2.3% higher than in quarter three a year ago.

The largest contribution to the increase in GDP came from the services sector, according to the ONS findings. Services grew by 0.7%, while production increased by 0.3% and agriculture by 0.5%.

The main cause of the increase in services growth between the second and third quarters was a rise in business services and finance, which saw growth rise from 0.6% in the second quarter to 1% in Q3.

Services account for the largest proportion of UK GDP at 78.6%, while production makes up 14.9% and construction at 5.9%. The agriculture sector contributes 0.7% to GDP.

Within production, manufacturing fell by 0.3% but this drop in output was offset by a 2.4% increase in mining and quarrying and a 1.2% uptick in water and waste management.

The Centre for Economics and Business Research (CEBR) noted that the ONS’s initial estimates for the construction industry were often less reliable than for other parts of the economy.

“Survey results from elsewhere paint a brighter picture for construction firms, with house-building highlighted as a particular strong point currently.”

It added: “On aggregate, today’s findings don’t give huge cause for celebration,  but neither are they too gloomy. The economic recovery may be built on relatively fragile foundations, including the imbalance between different sectors, but growth is still ticking along for now.”

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