GDP drops 0.6% in second quarter better than 0.7% expected

Gross Domestic Product (GDP) in the United Kingdom contracted by 0.6 % compared with the previous quarter and not 0.7 % as first estimated.

The improvement came mostly from the construction and manufacturing industries.

Figures from the Office of National Statistics revealed that output in the production industries fell by 0.5 % compared with a fall of 5.1 % in the previous quarter. Output of manufacturing industries fell by 0.1 % compared with a fall of 5.4 % in the previous quarter.

Construction output fell by 0.8 % over the quarter, revised from a fall of 2.2 % in the previous estimate. Output in the service industries fell by 0.6 % in the second quarter compared to a fall of 1.9 % in the previous quarter.

The figures also revealed households are saving more. The household saving ratio was 5.6 % in the latest quarter compared with 3.9 % in the previous quarter.

Government consumption rose by 0.6 % and is now 2.2 % higher than the second quarter of 2008.

The trade deficit in real terms decreased from £7.3bn in the first quarter of 2009 to £6.5 bn in the second quarter of 2009. Exports of goods and services fell by 1.4 % while imports were down 2.2 %.

Compensation of employees at current prices rose by 0.8 % and is now 0.4 % below the level seen a year ago.

GDP is still down 5.5 % on the same period in 2008 (see graph).