GDP, Up By 0.3%

Output rose by 0.3% q/q in Q1 2013 after falling by 0.3% the previous quarter. On year-on-year basis, GDP increased by 0.6%. The main contribution to growth was the changes in inventories (+0.4 pp). Household final consumption expenditure rose also further. Domestic demand had thus offset the negative contribution of net exports to the GDP growth (-0.1 pp).

The ONS confirmed its preliminary estimate. The United Kingdom escaped from a triple-dip recession. Output rose by 0.3% q/q in Q1 2013 after falling by 0.3% the previous quarter. On year-on-year basis, GDP increased by 0.6%.

■ Industrial production and activity in services were unrevised. The main contributor to the increase was the service sector (+0.6% q/q), which contributed 0.4 pp to the growth. Manufacturing production declined by 0.3% q/q, but industrial production (+0.2% q/q in Q1 2013, after -2.1% q/q) benefited from a rebound in mining and quarrying (+4% q/q, after -10.7% q/q in Q4 2012), which had suffered from maintenance shutdowns at the end of last year. It was also underpinned by electricity production in line with cold weather. However, activity in construction, which recorded in Q4 2012, its first increase since Q2 2011, was down by 2.4% q/q, reducing GDP by 0.1pp.

■ The British economy has been supported by domestic demand. According to the ONS, the main contribution to growth was the changes in inventories (+0.4 pp). The other components were less impressive. General government consumption remained unchanged (0%), and household final consumption expenditure rose only by 0.1% q/q (after +0.4% q/q) in line with high inflation, which weighed on purchasing power. However private consumption was up for the sixth quarter on a row and by 1.3% year-on-year. Gross fixed capital formation declined for the third consecutive quarter (-0.8% q/q) as corporates probably adopted a wait-and-see attitude and put off some of their investment plans in line with timid growth prospects. However domestic demand had offset the negative contribution of net exports to GDP growth (-0.1 pp). The decline in exports (-0.8% q/q, after -1.6% q/q in Q4 2012) has been larger than the decrease in imports (-0.5% q/q, after -1% q/q in Q4 2012).

■ The carry-over of GDP for 2013 was +0.5% in Q1 2013. The euro zone crisis and the global economic conditions still weigh on exports and the UK economy. GDP thus remains 2.6% below the peak in Q1 2008. But GDP, up by 0.3% in 2012, may record a larger increase this year in line with a slight improvement in world demand.

BY Catherine STEPHAN

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