UK economy growing faster than thought

The Office for National Statistics (ONS) has now stated that the UK economy grew at a faster pace last year than originally announced.

The revised official figures state that the economy grew by 0.6% in the final three months of 2014, up from the previous estimate of 0.5%. The upshot is that growth for the year was 2.8%, higher than the earlier reported 2.6%. This is the highest rate of annual growth since 2006, which saw the economy grow by 3%.

An expansion in both production and services as well as a number of industries such as agriculture and fishing in the fourth quarter helped to fuel the increase, according to the ONS. But the biggest contribution to the revised figure was a strong performance of exports, which rose by 5.9% in the last quarter.

With UK inflation having fallen to 0% in February, the lowest since records began, and with real term wage growth for the first time in the past few years, UK consumer confidence has also risen to its highest level in more than 12 years in March, according to a survey from researchers GfK.

Manufacturers too are still expanding, having grown for 24 consecutive months. The Markit purchasing manager's index (PMI) was at 54.4 in March, higher than expected. Any reading above 50 on the Markit PMI survey indicates expansion.

The growth was powered by the biggest rise in new business since July last year, led by the consumer goods industry, according to the Markit PMI survey.

So more good news, and at the moment, concerns over slowing house price increases and the General Election don't seem to be worrying consumers unduly.

The impact on the markets is less clear, with the FTSE100 having retreated somewhat from its record high, and whether we are in for some pre-election volatility remains to be seen.

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