LONDON | The second release of UK GDP figures shed some light on the surprisingly large decline in GDP in the first quarter. The revised figures showed an even larger drop in the construction sector, with -18% or a -1.3% contribution to quarterly GDP growth.
Not to worry, said JP Morgan in Monday’s note. Even if the figures are correct, however, the sector only represents 8% of economy (unlike in some other European countries we know too well) and the remaining sectors fared better with growth excluding construction of 0.1%. According to Dan Morris, from JP Morgan Asset Management,
“accompanying the release was the breakdown between public and private sector spending, which was also modestly encouraging. Government stimulus made up the bulk of the growth for the quarter, but household consumption also increased.
“Most of the decline in GDP was explained by the change in inventories. This is transitory and we expect it to be at least partly reversed next quarter. The fall in net exports is disappointing, but given the turmoil in the euro zone, not surprising.”