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Last Updated: Friday, 26 August 2005, 10:26 GMT 11:26 UK
Economic growth revised upwards
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A higher manufacturing estimate was behind the upward revision
The UK economy grew faster than previously thought in the second quarter of 2005, new figures show.

In the three months to June UK GDP grew by 0.5% compared to the previous quarter, the Office for National Statistics (ONS) said.

The improvement from the ONS's previous estimate of 0.4% was widely expected by economists.

The upward revision was due to a higher estimate for manufacturing output, analysts said.

The manufacturing sector was found to have shrunk by only 0.3%, compared with preliminary estimates of a 0.7% drop.

Rates benign

Annual UK growth was also revised up by 0.1% to 1.8% during the second quarter.

We still expect rates to come down but not until next year
Philip Shaw, economist

However, consumer spending growth picked up only slightly to a rate of 0.2%, from 0.1% in the first three months of the year, the ONS figures showed.

"It's a mixed bag," said Deutsche Bank economist George Buckley.

"On the one hand the market got the 0.1% upward revision it was looking for, on the other consumption growth remains weak."

Commentators agreed that the upward revision would have little impact on interest rates.

"There are few policy implications from this data. We still expect rates to come down but not until next year," said Philip Shaw at Investec.

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