Economic Review

SummaryThe second estimate of Gross Domestic Product (GDP) for 2010 Q3 reports that the UK economy expanded by 0.8 per cent. This is unrevised from the Preliminary GDP estimate published last month. Output growth has slowed from 1.2 per cent in the second quarter, when a number of industries rebounded strongly from a weak first quarter of the year, especially the construction industry. First estimates for the demand‐side of the economy show that the slowdown in GDP growth was concentrated in domestic spending, as the pace of growth in household consumption, fixed investment and general government consumption all slowed. It also appears that the contribution of stockbuilding to growth peaked in the summer. However, net trade contributed positively to growth for the first time for over a year. In the labour market, unemployment fell in the latest quarter but the proportion unemployed for over 12 months continues to rise. Average weekly earnings growth remains muted, but has picked up from the lows of last year. Rates of producer prices inflation and services producer prices inflation have increased in 2010 reflecting an increase in commodity prices, depreciation of sterling, and the stronger cyclical position of the UK economy.