GDP grows by 0.8% in third quarter

GDP increased by 0.8% in the third quarter of 2010, which is unrevised from the previous estimate, according to the Office for National Statistics (ONS).

It means GDP is now 2.8% higher than in the third quarter of 2009.

Jamie Dannhauser, a senior economist at Lombard Street Research (LSR), says today’s data confirms LSR’s belief that the recovery retains a “fair degree of momentum”.

“Our projection of above-trend output growth in Q4 is looking relatively safe as a result,” he adds. LSR’s latest Quarterly Economic Forecast embodies GDP growth of 0.4% in the fourth quarter of the year.

Output in the services industry remained unrevised at 0.6% in the latest quarter, which is the same as the increase in the previous quarter.

Growth was driven in the third quarter by a rise of 1.4% in transport, storage and communications services. Distribution, hotels, catering and repairs grew by 0.9%, and business and finance grew by 0.3%. (article continues below)

Output of the production industries remained unrevised at 0.6% and, within production, manufacturing output increased by 1%. But mining and quarrying output fell by 1%. Construction output rose by 4%.

Household expenditure rose 0.3% following a rise of 0.7% the second quarter of 2010.

Government final consumption expenditure rose by 0.4% and is now 2.8% higher than the third quarter of 2009.

In the third quarter of 2010 the trade deficit in real terms decreased to £9.7 billion from £10.9 billion. Exports of goods and services rose 2.2% whilst imports rose 0.7%.