UK set for its third quarter of improved growth

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THE UK economy looks set to notch up a third successive quarter of improved growth when official figures are published later this week.

Buoyant survey data from a number of sectors have led some economists to predict gross domestic product (GDP) may have grown by nearly one per cent in the three months to the end of September.

However, official figures have been less rosy, showing slowdowns in construction and manufacturing during August.

Meanwhile, retail sales have had a rollercoaster ride, soaring amid the July heatwave before slumping again in August, then recovering in September.

GDP returned to growth in the first quarter of this year, posting a 0.4 per cent increase, improving to 0.7 per cent in the second quarter.

There are hopes that the figure for the third quarter will be up again when the Office for National Statistics announces its first estimate of performance over the three-month period on Friday.

It will be watched for signs of whether the recovery is building or has stalled, coming weeks after Chancellor George Osborne received a boost from the International Monetary Fund as it sharply upgraded its UK growth forecast for 2013 to 1.4 per cent.

Investec’s Philip Shaw forecasts 0.8 per cent growth for the third quarter but said it was “not impossible” that this could be closer to one per cent.

He said: “Surveys have been very buoyant indeed. However the official data over the quarter so far have portrayed a slightly less robust picture.”

Analysts at Scotiabank also predict a reading of close to one per cent – lying somewhere between “spectacular” survey data suggesting growth of up to 1.5 per cent and official figures pointing to expansion of as little as 0.5 per cent.

Howard Archer, of IHS Global Insight, predicts 0.8 per cent, which would be the strongest since the second quarter of 2010.

He said domestic demand may have risen by around one per cent for the third quarter of 2013 but will have been tempered by disappointing net trade and industrial production figures.

Mr Archer added: “Tight fiscal policy, only gradually easing credit conditions and relatively limited global growth currently remain significant handicaps to UK growth prospects while consumer purchasing power is currently constrained by very low earnings growth running well below inflation.”