The UK economy grew 0.6% between April and June, in line with forecasts, according to the Office for National Statistics (ONS).
The economy was boosted by growth in the services sector, particularly in IT, scientific research and legal services, while manufacturing and construction output both fell in the period.
GDP rose 0.7% in the first three months of the year.
Neil Birrell, CIO at Premier Miton Investors, said: “The second quarter seems like a long time ago, but the GDP data confirms that the UK economy is in good health.
“The Bank of England is in the nice position, unlike other central banks, of having a level of surety in the data it is seeing, when setting policy. With inflation playing ball as well, the path to lower interest rates looks to be set, the timing of the cuts is now the focus.”
See also: UK inflation rises to 2.2%
Jeremy Batstone-Carr, European strategist at Raymond James, said the data marks a further departure from the shallow recession of late 2023 and provides a valuable tailwind for the new Labour administration.
“Admittedly, June’s lackluster outturn, the consequence of junior doctors’ strikes and lower retail sales volumes, has removed some of the gloss. However, services activity didn’t dry up altogether as the weather improved and construction activity strengthened. This offset a more subdued performance from the industrial and manufacturing sectors after a strong May.
“Overall activity remained positive in June, proving sufficient to deliver another robust quarterly performance in line with the Bank of England’s forecast. Today’s data confirms that the UK remains a beacon of resilience for developed economies, especially as growth concerns in other countries are becoming more acute.”
Luke Bartholomew, deputy chief economist at abrdn, said the figures confirm that the economy has enjoyed a “strong recovery” from its mild technical recession last year.
See also: Premier Miton’s Birrell discusses risks of ‘benign’ market
“Growth may slow a little in the second half of the year, as rises in real incomes continue to gradually come down. Interestingly, the UK seems to be in a very different part of the cycle than the US, where the economy is cooling after a very strong 2023.
“This helps to explain some of the difference in urgency around monetary policy easing in the two countries, with the Fed likely to be more active in cutting rates later this year than the Bank of England. But with UK services inflation finally starting to moderate sharply, there is certainly space for the BoE to also cut rates again this year.”
This story was written by our sister title, Portfolio Adviser
