BRITAIN’S economy has finally started to grow again, according to data published yesterday by the National Institute of Economic and Social Research (NIESR), one of the UK’s most respected forecasters. <br /><br />The NIESR figures showed that GDP rose by an estimated 0.2 per cent in the three months to August, the first time it has risen over a quarterly period since May 2008. The expansion follows a 0.3 per cent contraction in the quarter ending in July.<br /><br />The NIESR said that this reinforced its view that the recession ended in May. The upbeat outlook came as data from the Office for National Statistics showed that industrial output made a good start to the third quarter, growing by 0.5 per cent in July, twice as fast as had been expected by economists. <br /><br />Manufacturing output also jumped in July, rising by a healthy 0.9 per cent to reach its highest level in 18 months. Jonathan Loynes, at Capital Economics, said: “The 0.5 per cent monthly rise in total production means that, were production just to stagnate in the next two months, the third quarter would see an increase in output of about 0.8 per cent.”<br /><br />Howard Archer at IHS Global Insight said: “The sector now seems well on course to expand in the third quarter and make a positive contribution to GDP growth for the first time since the end of 2007.”<br /><br />Britain is lagging its European counterparts Germany and France in exiting the recession. Both of these countries saw modest growth of 0.3 per cent in the second quarter. <br /><br />But while the NIESR was more upbeat, it warned that “there may well be a period of stagnation now, with output rising in some months and falling in others; the end of the recession should not be confused with a return to normal conditions”.<br /><br />Unemployment is expected to rise well into next year, peaking at just over 3m. However, there are also signs that hiring activity is improving. The REC/KPMG report on jobs published today indicates that there was a slight growth in permanent and temporary appointments in August, the first time permanent appointments had risen in 17 months. <br /><br />Meanwhile, ratings agency Moody’s is today expected to say that it is unlikely to downgrade the UK’s all-important triple A credit rating.