"It's always difficult to tell where you're going by looking in the rear-view mirror, and as such today's GDP figures can't be taken as evidence of the current climate."
-Ben Brettell, Hargreaves Lansdown
UK GDP advanced 0.6% on a seasonally adjusted basis in the second quarter of 2016, as reported by the Office for National Statistics on Wednesday, surpassing the 0.5% market forecast and the 0.4% rise seen in the first quarter. Economic output expanded in 2 out of 4 main industrial sectors: services added 0.5%, whereas production gained 2.1%. However, construction and agricultural sectors showed a pronounced downward trend sliding 0.4% and 1% respectively. Year-over-year, British GDP increased by 2.2%, above the expected 2% and compared to the 2% reading in the previous quarter. The Pound weakened upon the news release and traded at just $1.311, while the FTSE 100 Index reached its highest level since July 2015 and traded at 6,770 in the second half of the London session on Wednesday. Despite the positive economic outlook provided by the quarterly GDP data, supported by the BoE and the Treasury promises to take all the needed actions to accommodate the economic growth, experts noted that the published results included only one week after the Brexit vote and were largely driven by booming industrial activity in May/June. The overall market forecast for the third quarter was revised down to 0.4%, reflecting the expectations of weakening economy captured by plummeting retail sales and lackluster PMI figures.
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