UK GDP Growth Beats Expectations on Strong Services Performance
The UK's GDP growth beat expectations in June due to strong services sector performance. The economy expanded by 0.3% month-on-month, surpassing a predicted decline of 0.1%. This result saved the quarter from a weak April-May performance, with May's numbers being revised downward. Services sector growth was driven by warm weather and the World Cup, but may see a payback in July-August.
However, production dragged down the overall GDP growth, with industrial production declining 0.2% month-over-month and manufacturing output decreasing by 0.5%. The visible trade deficit also widened to £23 billion, mainly due to non-EU energy imports and soft exports.
Business investment was a bright spot, increasing by 1.7% quarter-on-quarter compared to an expected decline of 0.3%. The Royal Institution of Chartered Surveyors (RICS) held its house price balance steady at -30%, while former Bank of England deputy governor Shafik left her position as chief economic adviser to the Prime Minister without a replacement.
Norges Bank kept interest rates unchanged at 4.25% in an interim meeting, maintaining a hawkish stance. The central bank signaled that further hikes would be necessary at upcoming meetings and emphasized the need for restrictive policy.