The UK economy grew by 3.1% in the second quarter of the year according to the latest figures from the Office for National Statistics.
The preliminary estimate of GDP was more or less in line with our expectations. The economy is on track for growth of not less than 3.0% this year and 2.8% next.
Service sector continued to support the expansion (up by 3.3%) with particularly good performances in the leisure sector (4.9%) and business services sector (4.2%).
Manufacturing and construction also made strong contributions with growth of 3.2% and 4.2% respectively.
This is the first estimate of growth based on partial information. The next update is due on the 16th August.
The initial estimate may well be revised up to growth of 3.2% based on revisions to the manufacturing data.
The estimates for manufacturing growth in the quarter appear at odds with the published information for April and May.
This week the IMF revised their forecasts of the UK economy to 3.2% for 2014 and 2.7% next.
The UK will be the fastest growing economy in the western world this year with deleterious implications for the trade balance.
If the IMF forecasts are correct, UK growth will accelerate in the second half of the year to 3.4%. It‘s simple arithmetic not complex economics!
If that is the case, The Overheating Index™ will move higher bringing the prospect of a rate rise before the end of year, into clear focus.