The British economy surged 0.8 percent in the first quarter, buoyed by rising industrial output, vibrant services industry and construction sector.
The figure was less than the median estimate of a growth of 0.9 percent in a Bloomberg poll of economists. However, it is still a marked improvement from the last three months of 2013, when it expanded 0.7 percent.
The statistics indicate that UK’s economy may be the best performing among Group of Seven countries this year, fuelling speculation that the Bank of England may hike interest rates by December. The IMF forecasts the economy to grow by 2.9 percent in 2014.
Every key economic sector recorded growth in the quarter under review. Construction sector expanded 0.3 percent, weighed by harsh weather in the two months of the year, reported the Office of the National Statistics. Industrial output grew 0.8 percent over the period, with manufacturing sector accelerating 1.3 percent, the most since 2010.
The services industry, which accounts for much of Britain’s GDP, rose 0.9 percent, with most of the activity coming from recruitment firms and business and financial services firms.
“The economy is back on its feet and is growing robustly,” James Knightley, a London-based economist at ING Bank NV in London, wrote. “We are still forecasting February 2015 for the date of the first BOE rate hike, but wouldn’t be completely surprised if it ended up coming before the end of this year.”
The sterling dived against the U.S. dollar following the report, which missed expectations. It was trading at $1.6799 in mid-morning trade in London. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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