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Construction rebound drives growth

Published:  23 July, 2010

UK: Construction sector output jumped 6.6% – the biggest rise in activity since the 1960s – helping Britain's economy grow almost twice as fast as expected in the second quarter.

The Office for National Statistics said GDP rose a quarterly 1.1% in April to June, compared with a forecast for 0.6% growth. It was almost four times the pace of 0.3% in the first quarter, and the highest for four years.

The ONS said output in the construction sector, one of the hardest hit by the recession, jumped 6.6% on the quarter, the biggest rise since 1963 and rebounding after poor weather hit activity at the start of the year. But overall, the headline jump was due mainly to increases in business services and finance. Service sector output rose 0.9%, three times the pace in the first quarter. Output in the production industries increased 1.0% as a widely expected rise in manufacturing offset falls in mining and utilities.

On an annual basis, GDP was up 1.6%, the biggest rise for more than two years. However, Jonathan Loynes, chief European economist at Capital Economics warned of a much weaker second half figures given recent business surveys showing weakening and the fiscal squeeze looming.

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