UK Q4 growth revised up to 0.7%
The UK economy grew more than initially estimated in the fourth quarter of last year, according to data from the Office for National Statistics.
Gross domestic product was up 0.7% in the final three months of 2016, up from an estimate of 0.6% growth at the end of last month.
Industrial output grew by 0.3%, up from a previous estimate of no growth, while construction growth was revised up to 0.2% from 0.1%.
However, for 2016, growth was 1.8% higher than the year before, revised down by 0.2 percentage points from the preliminary estimate.
Capital spending dropped by 1% in the fourth quarter compared to the third, while business investment came in at £43.5bn, down £0.5bn on the previous quarter.
The pound was trading at a two-month high versus the euro following the GDP revision and as worries about the political situation in France weighed on the single currency.
Chris Williamson, chief business economist at IHS Markit, said: “The news of faster the previously thought growth at the end of last year is marred by worrying signs about the durability of the upturn. A slowdown in consumer spending and a drop in business investment raise questions about the extent to which such strong growth can be sustained. Consumer spending rose by 0.7%, making the weakest contribution to the economy for a year, while business investment fell 1.0%.
“We should bear in mind that the investment data are often subject to heavy revision, and businesses generally remain upbeat about the year ahead. Surveys show business optimism about the year ahead running at its highest in one and a half years, suggesting companies are clearly expecting the good times to continue.
“But these data add to concerns that cracks are developing, with households pulling back on spending as higher inflation bites and Brexit clearly a major source of uncertainty.
Pantheon Macroeconomics said the upward revision to GDP growth was not a surprise.
"Revisions to industrial production and construction data earlier this month had suggested the preliminary estimate would be nudged up. The real interest here is in the expenditure breakdown of GDP, which shows that the economy’s momentum continued to depend on household spending, which rose by 0.7%. Admittedly, net trade made a 1.3pp contribution to quarter-on-quarter growth in GDP, but the 4.1% jump in exports depleted inventories, which subtracted 1.1pp from GDP growth.
"Net trade is extremely volatile from quarter-to-quarter - indeed, it subtracted 1.2pp from GDP growth in Q3 - so it is unwise to infer much from one’s quarter’s growth contribution. The renewed weakness this year of surveys of export orders suggests that net trade will not make a large positive contribution to GDP growth over the coming quarters. Meanwhile, business investment fell by 0.1%, and total investment was flat."