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UK GDP Contracts Unexpectedly In Q2

The UK economy contracted unexpectedly in the second quarter, first estimate from the Office for National Statistics showed Friday.

Gross domestic product fell 0.2 percent sequentially, reversing first quarter's 0.5 percent growth. GDP was forecast to remain flat.

On an annual basis, the economy grew at a slower pace of 1.2 percent after rising 1.8 percent in the first quarter.

The production-side breakdown showed that the services sector output provided the only positive contribution to GDP growth. Nonetheless, services output grew only 0.1 percent, the weakest in three years.

The production sector shrank 1.4 percent, which was the biggest fall since late 2012. The decline was driven by a 2.3 percent fall in manufacturing reflecting weak car production.

Mining and quarrying output fell 0.4 percent, driven by scheduled maintenance in a number of oil and gas fields.

At the same time, construction output decreased 1.3 percent due to a fall in repair and maintenance work.

The expenditure-side of GDP showed that government spending grew 0.7 percent and household consumption advanced 0.5 percent. Meanwhile, gross fixed capital formation fell 1 percent.

The total trade deficit narrowed GBP 16.0 billion to GBP 4.3 billion in the second quarter, due largely to falling imports of goods.

In June, GDP remained flat on month in June after expanding 0.2 percent in May. Economists had forecast a 0.1 percent rise.

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