Interest rate rises seem on the horizon as the UK pound has strengthened for the end of June. This occurred on news that the economy had grown remarkably for the first three months of 2018.
Latest UK Economy Figures
The latest output stats for the UK construction industry were raised by the Office for National Statistics (ONS) as the sector helped grow the economy by 0.2% for the period. The construction industry accounts for 6% of GDP and the latest upgrade to the figures are based on this year’s strong growth, when compared to 2017.
The latest figures from the ONS also show that powerhouse services grew by 0.3% in April 2018, on the previous month’s figures.
The growth in the construction sector was quite a surprise as forecasts had indicated the sector would shrink by 2.7% for the first quarter, due to the cold weather.
ONS View
A spokesperson for the ONS commented: “There have been some notable upward revisions to construction output in recent quarters. Today’s new construction estimates show a much stronger growth profile throughout 2017. Output is now estimated to have increased by 7.1 per cent in 2017, up from 5.7 per cent“.
The services sector was also boosted in April due to increased legal work, which makes up around 80% of output. Although figures for the food and drink sector and motor trade industry were a good deal weaker.
A Bank of England hike in interest rates was anticipated in May, but this was held off, it seems likely that an August rise forecast by many economists will happen.
The overall positive nature of the new figures issued by the ONS saw sterling gain around 0.9% against the US $, to reach $1.32.
Economic forecasting group, EY ITEM Club commented: “The modest upward revision to GDP growth in the first quarter and healthy services output growth in April – along with recent evidence of a marked pickup in retail sales in the second quarter – fuels our belief that the MPC is more likely than not to hike interest rates from 0.50 per cent to 0.75 per cent at their August meeting“.