ICES grew surprisingly strongly in the third quarter of 2011, prompting the Office for National Statistics (ONS) to revise GDP figures up slightly for the three-month period.
However, they cut growth estimates for the previous quarter, leaving the year’s expansion rate unchanged, and economists predict a tough 2012.
GDP grew by 0.6 per cent from July to September, not 0.5 per cent as previously thought, as services expanded by 2.4 per cent, revised up from 2.1 per cent, and household consumption, capital investment and exports all gave the figures a lift.
The construction sector grew by 0.3 per cent in the three-month period, when it was previously thought to have contracted by 0.2 per cent, and business services and finance grew by 1.2 per cent, not one per cent.
The performance in 2010 was also better than thought, with the economy growing by 2.1 per cent, revised up from 1.8 per cent previously.
However, real household incomes fell by 0.2 per cent over the year, the first annual fall since 1982.
Compared with quarter three of 2010, incomes are down one per cent.
“The third quarter data substantially overstate the underlying health of the economy,” said Howard Archer, economist at IHS Global Insight. “It was lifted by a catch-up effect from activity lost to temporary dampening factors in the second quarter, including working day lost to Royal Wedding, manufacturing supply-chain disruptions resulting from the Japanese tsunami, money spent on Olympic ticket sales but not yet counting towards growth,”
“We anticipate modest contraction in early 2012 before the economy stabilises and returns to gradual growth in the second half of 2012. This would result in GDP growth being limited to just 0.3 per cent next year.”