–Q2 GDP +0.2% q/q; +0.7% y/y;
–Q2 GDP median forecast +0.2% q/q; +0.8% y/y

LONDON (MNI) – Quarterly economic growth slowed in the second
quarter as the impact of the Royal Wedding and the Japanese Tsunami hit
output, figures released by National Statistics showed Tuesday.

Gross domestic product rose by 0.2% on the quarter and by 0.7% on
the year, broadly in line with the median forecast for a quarterly
increase of 0.2% and a 0.8% rise on the year.

The outturn is below the latest forecast from the Bank of England
which was for GDP to rise by between 0.3% and 0.4% on the quarter in Q2.

While the slowdown in growth from a 0.5% quarterly rise in Q1 is
disappointing, National Statistics said that a number of one-off special
factors had hit growth during the quarter.

These special factors included the additional bank holiday for the
royal wedding, the royal wedding itself, the after-effects of the
Japanese Tsunami and record warm weather in April.

National Statistics said it estimated that the net downward impact
on GDP growth from these special factors in Q2 could have amounted to up
to 0.5 percentage point, meaning that without them growth would have
risen by a far more healthy 0.7% on the quarter.

It is likely that some of this output may be lost but we should
also see some bounceback in Q3 as well. National Statistics would not
speculate on whether there would be a boost to output next quarter.

Services output rose 0.5% on the quarter in Q2 following a 0.9%
rise in Q1, with strong growth seen in transport, storage and
communications of 1.1%. Business services and finances output rose 0.7%,
while distribution, hotels and restaurants growth stood at 0.3%.
Government and other services output was unchanged between Q1 and Q2.

The rise in services output was partially offset by a 0.3%
quarterly fall in manufacturing output and a far larger 1.4% fall in the
wider measure of industrial production, as utilities output plunged due
to the warm weather.

Construction output was up 0.5% on the quarter following a 3.4%
fall in Q1, while agricultural output fell 1.3%.

–London newsroom: 44 20 7862 7491; email: drobinson@marketnews.com

[TOPICS: MABDS$,M$B$$$,MT$$$$]