Triple-dip recession fears eased as a leading economic forecaster said the UK has already returned to growth, while officials reported the dominant services sector has expanded at its strongest pace in five months.
The UK economy will dodge a recession with a return to yearly growth of 0.5pc in the first quarter of this year, followed by a more rapid 1.4pc expansion in the next three months, according to the Organisation for Economic Co-operation and Development (OECD).
Its growth forecasts compared to a contraction of 1.2pc in the final three months of the last year, as the Paris-based think-tank presents annualised rather than quarterly growth rates.
On a quarterly basis, the UK economy shrank by 0.3pc at the end of last year.
The predictions represented a further boost to growth hopes, as, separately, the Office for National Statistics (ONS) said that the services sector, which accounts for three quarters of the UK’s gross domestic product (GDP), grew by 0.3pc in January compared to the previous month, when output dropped by 0.4pc.
The performance represented the strongest growth rate since August last year, when businesses were boosted by the Olympic Games.
The rise in output from the services industry in January will temper the hit to the economy from a 1.2pc fall from production – including the manufacturing sector and the oil and gas industry - and a 6.3pc drop in construction, reflecting its weakness in winter.
The data showed that activity at hotels, restaurants and retailers was flat in January, consistent with poor weather in the second half of the month keeping people at home.
However, transport, storage and communication businesses bounced on the previous month, while the key business services and finance sector also picked up.
As a result, analysts said the figures supported hopes that the UK can avoid a slide back into a recession – defined as two consecutive quarters of negative growth.
“The 0.3pc rise in services output in January is very good news for hopes that the economy can avoid further contraction in the first quarter of 2013 and dodge a triple dip,” said Howard Archer, UK economist at IHS Global Insight.
None the less, there were warnings that growth will have been weak, or that the economy could even have stayed flat on a quarterly basis.
Jens Larsen, chief European economist at RBC Capital Market, predicted that the strength in services would only just off-set the weakness in the productive industries.
“On the basis of an assumption that services will grow about 0.4pc in the first quarter, our current Q1 GDP call for flat output continues to look reasonable,” he said.
telegraph.co.uk
The UK economy will dodge a recession with a return to yearly growth of 0.5pc in the first quarter of this year, followed by a more rapid 1.4pc expansion in the next three months, according to the Organisation for Economic Co-operation and Development (OECD).
Its growth forecasts compared to a contraction of 1.2pc in the final three months of the last year, as the Paris-based think-tank presents annualised rather than quarterly growth rates.
On a quarterly basis, the UK economy shrank by 0.3pc at the end of last year.
The predictions represented a further boost to growth hopes, as, separately, the Office for National Statistics (ONS) said that the services sector, which accounts for three quarters of the UK’s gross domestic product (GDP), grew by 0.3pc in January compared to the previous month, when output dropped by 0.4pc.
The performance represented the strongest growth rate since August last year, when businesses were boosted by the Olympic Games.
The rise in output from the services industry in January will temper the hit to the economy from a 1.2pc fall from production – including the manufacturing sector and the oil and gas industry - and a 6.3pc drop in construction, reflecting its weakness in winter.
The data showed that activity at hotels, restaurants and retailers was flat in January, consistent with poor weather in the second half of the month keeping people at home.
However, transport, storage and communication businesses bounced on the previous month, while the key business services and finance sector also picked up.
As a result, analysts said the figures supported hopes that the UK can avoid a slide back into a recession – defined as two consecutive quarters of negative growth.
“The 0.3pc rise in services output in January is very good news for hopes that the economy can avoid further contraction in the first quarter of 2013 and dodge a triple dip,” said Howard Archer, UK economist at IHS Global Insight.
None the less, there were warnings that growth will have been weak, or that the economy could even have stayed flat on a quarterly basis.
Jens Larsen, chief European economist at RBC Capital Market, predicted that the strength in services would only just off-set the weakness in the productive industries.
“On the basis of an assumption that services will grow about 0.4pc in the first quarter, our current Q1 GDP call for flat output continues to look reasonable,” he said.
telegraph.co.uk
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