UK Manufacturing and Production Lift Confirms Second Quarter GDP Data

Official figures for the UK's manufacturing and production sectors confirmed earlier estimates, that the economy picked up the pace in the second quarter, as a recovery dawns on the horizon.

Office for National Statistics (ONS) data shows that UK manufacturing output grew 0.6%, in the three months to June, on the quarter before. Production lifted 0.7% over the same period.

Both numbers back up the ONS's preliminary estimate that GDP growth accelerated to 0.6% in the second quarter, as confidence and output build momentum along 2013.

"Today's figures show an improving trend in the manufacturing sector which chimes with other economic data being seen," said Mike Rigby, head of manufacturing at Barclays.

"The near-term outlook is looking more positive than the first half of the year, with the potential for certainty over UK interest rates and Eurozone stability helping to spur confidence.

"There is however more work for manufacturers to do, but this is a solid foundation which bodes well for the future."

The Pace of Economic Expansion

Early signs from the private sector suggest the pace of economic expansion has quickened further at the beginning of the third sector.

Britain's dominant service sector saw activity expand at its fastest pace for six-and-a-half years during July, according to the Markit/CIPS UK services Purchasing Managers Index (PMI). The PMI reading shot up to 60.2 in July, from the previous month's 56.9.

UK manufacturing output during last month soared to its highest level since February 2011, amid rising production, strengthening of new orders growth, increasing export orders, and cost inflation rising below the average rate.

The Markit/CIPS manufacturing PMI hit 54.6 in July, up from June's 52.9.

Output from the UK's long-suffering construction sector also leapt in July to its highest level in over three years, off the back of a spike in residential homebuilding. The Markit/CIPS construction PMI hit 57.0 in July, up sharply from June's 51.0.

Forecasts for the UK economy have also been lifted alongside rising output.

The National Institute for Economic and Social Research (NIESR) predicts that the UK economy will grow by 1.2% in 2013 and 1.8% in 2014, both 0.3% higher than previously forecast.

"The main cause of the improvement in the economic growth outlook is a rise in the prospects for consumer spending growth," said the NIESR, though it added that it is "at the expense of household saving, rather than a consequence of rising real disposable incomes".