UK GDP growth slows to 0.7% in third quarter, as expected - UPDATE

UK gross domestic product (GDP) expanded at a 3% year-on-year pace over the three months to the end of September, led by industrial output, although it slowed from the 3.2% clip registered in the previous quarter, according to the Office for National Statistics (ONS).

In quarter-on-quarter terms GDP expanded at a 0.7% clip, also as expected, but down from 0.9% growth in the second quarter.

Also expressed in terms of quarterly rates of change, services output, which is by far the largest sector in the economy, grew by 0.7%, followed by industrial output which rose by 0.7%, construction with a 0.8% gain and agriculture, which notched up an increase of 0.3%.

ONS highlighted the “clear improvement” seen in construction sector output this year. On the basis of Friday's figures Britain's output was 3.4% above the pre-crisis peak, which was reached in the first quarter of 2008. The data marked the seventh consecutive quarter of growth above the economy's estimated potential rate.

“Although there has been widespread growth across all major components of GDP since the start of 2013, the service industries remain the largest and steadiest contributor to economic growth and the only component of GDP where output has exceeded its pre-downturn peak,” the statistics office added.

Activity coming "off the boil," analysts say

Howard Archer at IHS Global Insight said the figures showed the economy held up pretty well in the third quarter but there are some recent signs that it may be coming a little off the boil, partly reflecting the fact that it is not immune to increased global economic uncertainty and Eurozone issues.

"The third-quarter moderation in growth was due to some slowdown in services expansion from the very strong rate in the second quarter while manufacturing output growth was relatively limited," Archer said.

Felicity Burch, senior economist at the Engineering Employers Federation said: "Today’s estimates confirm the economy has slowed, with little surprise that export-intensive sectors have been most affected. After strong growth in the first six months of the year, the pace of growth in manufacturing has also slackened as a result of weaker demand from key markets including Europe and China."

As of 09:41 cable was 0.18% higher on the day at 1.6055.