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UK GDP: ONS cuts Q2 contraction to 0.5%

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New figures released by the Office for National Statistics show the UK economy shrank by less than feared during the second quarter of 2012.

Today’s revised data says the economy contracted by 0.5 per cent over the April to June period, down from the 0.7 per cent fall that headlined July’s preliminary estimate.

Economists had expected the preliminary figures to be revised up as more timely data became available to the ONS.

Last month’s estimate reignited calls for the ONS to re-examine its methodology for calculating the UK’s growth after commentators said that GDP data was diverging from other indicators such as business surveys and employment levels.

The ONS say: “The main causes of the revision to GDP came from upward revisions to both the construction and production industries, with each contributing approximately 0.1 percentage points to the upward revision to GDP.”

The original GDP figure assumed already weak industrial and construction output was exacerbated by the extra bank holiday in June.

However, data since released by the ONS shows output in these two sectors was better than thought. Industrial production fell by 0.9 per cent rather than 1.3 per cent, while the contraction in construction output was 3.9 per cent not 5.2 per cent.

In addition, retail sales over the three-month period dropped by 0.3 per cent. The first GDP estimate had retail sales down as falling by 0.7 per cent.


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