The latest revision to the UK GDP figures from the ONS show that growth in the first quarter of 2015 was estimated at 0.4 percent, up by 0.1 percent on the initial estimate of 0.3 percent.
Growth for the whole of 2014 has also been revised up by 0.2 percent to three percent.
GDP per head though only increased by 0.2 percent in 2015 quarter one and by 2.3 percent over 2014.
Production output was estimated to have increased by 0.2 percent in Q1 2015 compared to Q4 2014, revised upwards from the previous 0.1 percent. The previous estimated growth in the services industries of 0.4 percent in Q1 2015 remained unchanged.
Nick Dixon, Investment Director at Aegon UK, said:
“The news that GDP growth was higher than expected for 2014 is welcome, but not necessarily surprising. Business sentiment suggested the UK economy continues to recover and that consumers are benefiting from low inflation and modest increases to real earnings.
“However, better than expected GDP estimates will only intensify hawkish calls on the Bank to normalise monetary policy sooner rather than later. Despite this, we still believe a rate rise is some way off, with volatility in Greece keeping the heat off policy makers for the time being.”
Martin Beck, senior economic advisor to the EY ITEM Club, comments:
“The level of GDP in Q1 is now 0.5 percentage points higher than in the previous release, showing year-on-year growth of 2.9%. However, growth in Q1 still looks on the low side so we would not be surprised to see it revised up further over time.
“The expenditure breakdown suggests a reasonable degree of balance across the domestic economy, with strong growth in investment confounding fears that electoral uncertainty would dampen spending. The external picture, on the other hand, remains soft, although the large negative contribution from net trade in Q1 is partly a function of noise in the data – Q4 2014 had seen an even larger positive contribution.
“The consumer sector appears to be reacting to a collapse in the oil price and the fruits of ‘noflation’. Real incomes were up 4.5% in the year to Q1, leading consumer spending growth to accelerate to 3.4%, the strongest reading since the end of 2007. And this morning’s consumer confidence data suggests that this boost continued into Q2.
“Overall, today’s data reinforces our confidence in our above-consensus forecast for GDP growth this year of 2.8%.”