UK GDP growth for the second quarter of 2016 was revised up to 0.7%, while service sector data for July also surprised on the upside, with output rising by 0.4% between June and July.
According to economics consultancy Fathom Consulting, the resilience of consumer confidence is a key factor in the stronger than expected performance.
“Overall, today's data are consistent with positive GDP growth in the third quarter, meaning that the UK will avoid recession this year - in line with our forecast,” Fathom said. “UK consumers have largely shrugged off the EU referendum result, with data released today revealing that the headline GfK Consumer Confidence Index rebounded in September to levels last seen before the UK's Brexit vote in June.”
“Today’s third official estimate of Q2 GDP was a positive surprise indicating that the UK economy has grown more than expected, though it would be prudent to remember that this reading only accounts for one week’s worth of post-Brexit trading,” said Jonathan Chitty, investment analyst at Brown Shipley.
“The first estimate for GDP growth in the third quarter, expected on the 27th of October, will provide a more meaningful insight in to how the UK economy is performing post-Brexit,” Chitty added. However, until ‘Article 50’ is invoked and we have a clearer picture of what the UK’s relationship with the EU will look like it is unlikely that the full impact of Brexit will be reflected in economic output data.”