The services sector is the powerhouse of the UK economic recovery

15 August 2014

The UK economy grew by 3.2% in three months to the end of June, slightly ahead of the provisional estimate of 3.1%, according to data from the Office for National Statistics (ONS), released today.

ONS says that the UK economic growth is at a six-year high and has recovered beyond its 2008 peak.

The services sector - which accounts for around 78% of UK economic activity - grew by 0.3% in June as compared to May, taking the annualised services sector growth rate to a six year high of 3.6%.

During Q2, production output grew by 0.3%, agriculture contracted by 0.2%, while construction remained flat, ONS confirmed.

Commenting on the ONS data, John Hawksworth, PwC’s chief economist, said:

“Today's revised GDP figures showed no change in the big picture of a steady recovery in the UK economy, with slightly above trend growth of 0.7-0.8% in each of the last five quarters.

“This is gradually using up the spare capacity in the economy, although the Monetary Policy Committee seems in no hurry to raise interest rates while wage growth remains so subdued.

“The services sector continues to dominate the recovery, but with some big divergences - output in the finance and insurance sectors is down 1.3%, while we’ve seen a rise in output of over 5% in wholesaling and retailing and an astonishing 9.3% in professional, scientific, administrative and support services.

“These two sectors are now the powerhouses of the UK recovery and account for nearly a quarter of total UK GDP."

PwC says that services growth is compensating for sluggish manufacturing output, which is still 7.5% below its pre-recession peak and that overall UK growth in 2014 should be at least 3%.

Contact John by email  |  Telephone: +44 (0)20 7213 1650

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