U.K. economic growth revised upwards on strong service sector growth

The economic growth of the United Kingdom has been revised upwards following a strong performance in the service sector and remained better than market expectations in the period surrounding the nation's referendum on membership of the European Union.

The UK’s second-quarter gross domestic product (GDP) grew at an annualized rate of 2.7 percent, up from an earlier estimate of 2.4 percent, data released by the Office for National Statistics (ONS) showed Friday. The revision was driven by fresh data showing stronger growth in the services sector than previously thought and higher business investment.

Business investment grew 1 percent on the quarter, compared with an earlier estimate of 0.5 percent growth. Moreover, services sector, which accounts for some 80 percent of the U.K.'s annual output, also performed better in July than expected. The sector grew 0.4 percent m/m, led by gains in retail, cinemas and transport and communications. Surveys of activity published over the summer suggested services-sector output shrank in July, reports showed.

In contrast to the GDP figures, the total trade deficit widened to 12.7 billion pounds in the second quarter or 2.6 percent of GDP. There are hopes that a more competitive pound will help boost demand for exports and reduce spending on imports.

"This fresh data tends to support the view that there has been no sign of an immediate shock to the economy, although the full picture will continue to emerge," Bloomberg reported, citing Darren Morgan, Statistician, ONS.