UK growth on track

UK economic growth rate seen as healthy

The UK economy is estimated to have grown by 0.9% in the three months to the end of July, compared with the previous three months.

This reinforces our view that further interest rate rises remain unlikely

Martin Weale
NIESR director

The figures, from the National Institute of Economic and Social Research (NIESR), are being seen as suggesting that the Bank of England's Monetary Policy Committee need not be concerned that output is rising too fast.

Last week, the committee left the Bank's base rate - which sets the trend for interest rates across the economy - unchanged at 6%.

There are mixed views over whether rates have peaked at this level or whether further rises will be required to choke off inflationary pressures in the economy.

Model figures

The NIESR takes the latest factory output data and feeds it into its growth model to produce monthly estimates of UK gross domestic product (GDP).

It came up with a growth rate of 0.9% for the second quarter, as well as for the three months to the end of July.

This was in line with the government's preliminary Q2 GDP estimate released last month.

NIESR director Martin Weale said: "This reinforces our view that further interest rate rises remain unlikely."

Manufacturing

Earlier in the day, the Office for National Statistics announced that UK manufacturing output had risen more quickly than expected in June.

It was up 0.2% on the month and 2.1% on the year, but overall production, which includes the volatile energy sector, rose at an annual rate of 2%, down from 2.3% in May.

The rise was seen by analysts as encouraging for the manfacturing sector without being a worry to the MPC, as the sector is not big enough for such changes to have much impact on the economy as a whole.