"It will have taken the economy more than six years to surpass the peak level that was seen in the first quarter of 2008 but it has undoubtedly finally achieved that feat in the second quarter"
- Howard Archer, economist at IHS Global Insight
Were we too optimistic in our assessments of the U.K. economy? Due to the upside revisions of the manufacturing and construction outputs, there were a chance that Friday's final GDP report will surprise markets to the upside, and provide another solid boost for the Sterling. Nevertheless, the report came mostly in line with forecasts, leaving the cable almost unchanged at 1.7034, just 0.05% higher than before the release of the data.
On Friday, the ONS said that first quarter's GDP remained unchanged from the previous estimates, driven by all major sectors of the economy, while manufacturing sector provided a solid boost, as output increased the most since Q2 in 2010. A key services sector, which accounts for 77.8% of overall activity, expanded by 0.8%, revised 0.1% from the earlier projection. The overall output posted a 0.7% gain over the observed period. As a result, the economy grew 0.8% on a quarterly basis, unchanged from previous estimate, while annual gain was downwardly revised to 3.0%. The best news in the report was the marked upward revision to business investment, meaning growth is getting more balanced. A 10% surge in business investment and solid gains in all major sectors is suggesting second quarter's GDP will be able to surprise markets to the upside.
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