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LONDON, Dec 22 (Reuters) - Britain's economy shrank by 0.2 percent in the third quarter of this year, a smaller upward revision than expected after stronger construction ouput was offset by a weakening in the services and industrial sectors.
The previous estimate of third quarter GDP had showed a 0.3 percent decline. Britain remains officially in recession unlike most of its major trading partners.
Analysts had expected Q3 GDP to be revised up to a decline of just 0.1 percent after a sharp upgrade to construction output data released earlier this month, and the pound briefly dipped to a two-month low against the dollar after the figures.
However, there were some encouraging signs that parts of the economy had turned the corner, with the first growth in household spending since early 2008.
"The headline figure is disappointing," said Philip Shaw, economist at Investec. "We had hoped for a slightly punchier number and we still find it hard to believe fully that the economy was contracting in Q3."
The Office for National Statistics said construction output grew 1.9 percent in the quarter, compared with a previous estimate of a 1.1 percent decline.
But services and industrial production output were both revised lower to show declines of 0.2 percent and 0.9 percent respectively -- both 0.1 percentage points below previous estimates.
The ONS said total economic output has fallen by 6.03 percent since Britain entered recession in Q2 2008 -- confirming the sharpest decline since quarterly records began in 1955.
However, recent activity surveys have suggested Britain's economy is regaining some strength and most experts expect it to have returned to growth in the final three months of this year after six quarters of recession.
There are also signs that the Bank of England's cut in interest rates to record lows and its 200 billion pound asset buying programme are helping to revive the economy.
The government's car scrappage scheme has also provided a boost, contributing to the 0.1 percent quarterly rise in household spending, the ONS said.
Real household disposable income was 1.2 percent up on the quarter and 5.2 percent higher than a year ago -- the biggest annual rise since 2001.
However, Britons are also putting more money aside, with the household saving ratio rising to 8.6 percent from 7.6 percent in the April-June period -- its highest in more than a decade.
"While not particularly good news for near-term growth it does suggest a better platform is starting to emerge for medium to longer term prospects," said James Knightley at ING.
There was also positive news on Britain's current account deficit, which at 4.703 billion pounds ($7.59 billion) in the third quarter, was just half analysts' expectations. The Q2 deficit was revised down sharply to 4.375 billion pounds from an earlier estimate of around 11.4 billion pounds. (Editing by Mike Peacock)