LONDON (dpa-AFX) - The UK economy expanded more than expected in the second quarter but the overall growth softened as the US frontloading had propelled growth at the start of the year.
Gross domestic product expanded 0.3 percent in the second quarter largely driven by growth in the service sector, the Office for National Statistics reported Thursday. Although the rate was stronger than the expected growth of 0.1 percent, it eased markedly from 0.7 percent in the first quarter.
'Some activity was brought forward to February and March ahead of changes to stamp duty in April and announced US tariff changes,' the ONS said.
Services output rose 0.4 percent from the first quarter and construction climbed 1.2 percent. But production reported a 0.3 percent fall.
Real GDP was estimated to have increased by 1.2 percent compared with the same period a year ago.
In June, GDP grew 0.4 percent, following a fall of 0.1 percent in May. Output was forecast to grow 0.2 percent.
On the production-side, services output was the largest contributor to the growth, increasing by 0.3 percent after a 0.1 percent rise in May.
Industrial production increased 0.7 percent, reversing a revised 1.3 percent fall. Within overall production, manufacturing gained 0.5 percent, partially offsetting May's 1.0 percent fall, data showed.
Construction output expanded 0.3 percent after falling 0.5 percent in May. At face value, the 0.3 percent GDP growth looks reasonable amid a flurry of global and domestic headwinds, ING economist James Smith said.
'But this is largely concentrated in components not intrinsically linked to underlying economic performance, and the Bank of England will take these figures with a pinch of salt,' he added.
British Chambers of Commerce Research Manager Stuart Morrison said the better-than-expected second quarter and June GDP numbers are welcome but the numbers mask the underlying pain being felt by businesses across the UK.
Another data from the ONS showed that the visible trade deficit remained largely unchanged at GBP 22.16 billion in June. The total trade that combines goods and services showed a shortfall of GBP 5 billion compared to a GBP 4.5 billion deficit in May.
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