Business investment growth boosts hope of GDP increase
BUSINESS investment growth in the UK in the first three months of 2010 has been revised upwards to 7.8 per cent on the previous quarter, official data showed yesterday.
Encouragingly, the annual decline in business investment was consequently trimmed to 7.7 per cent from the previous estimate of 11 per cent.
Service sector investment jumped 11.1 per cent on the previous quarter, although it is still some eight per cent down on a year earlier. The construction industry also experienced an impressive spike of 36.5 per cent. Manufacturing investment stabilised, ending the sharp decline that the sector suffered in 2009.
IHS Global Insight’s Howard Archer said: “The upwardly-revised performance boosts hopes that overall GDP growth could be revised up from the currently reported rate of 0.3 per cent quarter-on-quarter when the delayed national accounts data are finally released on 12 July.”
The GDP figures should have been released yesterday but the Office for National Statistics announced potential errors in the dataset had forced it to postpone publication.
Despite the growth in business investment, Archer said this followed contraction in seven of the previous eight quarters, adding it seemed unrealistic to expect investment to surge over coming months given the appreciable excess capacity, limited final demand and uncertainty about the longer-term strength of the recovery.