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Tuesday, 23 November, 1999, 11:55 GMT
Growth figures give rate hope
The growth in services was the lowest since early 1993

Upward pressure on UK interest rates may have eased slightly as final figures for third quarter economic growth show no change on provisional figures.

The figures show an unrevised rise of 0.9% on the quarter and year-on-year growth of 1.8%, the Office for National Statistics said.

Analaysts had forecast an upward revision in the figures to show a quarterly growth rate of 1% and annual growth of 1.9%.

Although the figures did not meet expectations, they still mean the economy is growing at its fastest rate for two years and at an annualised rate of nearly 4%. This is well above its long-term trend rate of 2.25%.

The ONS said upward revisions to production output were offset by downward revisions to service industries.

The service sector was revised down to 0.9% largely due to new information from the financial and business services.

The 2.4% rise on the year for the service sector was the lowest annual growth rate since the first quarter of 1993.

The distribution, hotels and catering and repairs category was also revised down to 0.8% from 0.9%.

Rate watch

The figures are closely watched by the Bank of England's Monetary Policy Committee when it decides on the appropriate level for UK interest rates.

"We are very happy that there was no revision to the GDP figures, because it supports our view that interest rates will not be raised next month, and that they will not be moving above 6% when they are raised next year," said Adam Law, a UK economist at Barclay's Capital.

Law said that the figures on service-sector growth, at its lowest annual rate since 1993, reflected a more balanced economic recovery.

Earlier in the year the service sector was driving the economy as the manufacturing and industrial sectors remained in the doldrums.

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See also:
09 Nov 99 |  The Economy
Economic growth swells war chest
16 Nov 99 |  The Economy
World growth accelerates

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