The UK economy delivered its strongest growth in more than a year, confounding expectations for another quarter of stagnation.
Data from the Office for National Statistics (ONS) showed the UK economy grew by 0.2% between April and June, the biggest increase since the first quarter of 2022, above City forecasts of zero growth and the Bank of England’s 0.1% projection.
Output bounced 0.5% in June, more than double City predictions, after after an unrevised fall of 0.1% in May 2023 and growth of 0.2% in April 2023.
Manufacturing output rose 1.6%, the construction sector expanded 0.3% while the services sector grew 0.1%.
Consumer spending during the quarter rose 0.7%, its biggest quarterly increase in more than a year.
Samuel Tombs at Pantheon Macroeconomics thinks "that the rate of quarter-on-quarter growth in GDP in Q2 can at least be maintained going forwards".
He reckons households "probably will build upon Q2’s 0.7% quarter-on-quarter increase in their real expenditure" as he expects "households’ real incomes to continue to rise further, as prices continue to rise less quickly than wages".
"We still think the economy will avoid a recession, with GDP rising by 0.3% quarter-on-quarter in both Q3 and Q4," Tombs estimated.