28/08/2009

Economy 'Contraction' Slowing

The rate at which the UK economy is contracting has been reduced.

In the three months from April to June the Office for National Statistics (ONS) said gross domestic product (GDP) dropped by 0.7% from 0.8% compared with the previous quarter.

Year-on-year decline has been reduced to 5.5% from 5.6%.

The revision was due to better performances in the manufacturing and production industries particularly energy, wholesaling and motor vehicle sectors.

Stephen Lewis Chief Economist at Monument Securities said: "It seems to have benefited from strength in general government spending and weakness in imports, which counts as a positive in GDP figures."

Although second quarter contraction compared to the same period last year remained the worst since records began in 1955.

George Buckley, Chief UK Economist at Deutsche Bank, commented: "The upward revision was a bit of a surprise but it still shows a fairly steep contraction.

"The most important piece of news is on inventories, which continued to fall at a fairly aggressive pace."

(GK/BMcC)

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