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Will UK’s 2Q17 Growth Strengthen Investor Sentiment?

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Nov. 20 2020, Updated 4:07 p.m. ET

UK’s Q2 economic growth

According to the data provided by the Office for National Statistics, the UK’s 2Q17 economic growth surprised the market with a rise of 0.3% as compared to a 0.2% rise in the first quarter of 2017. The growth was in line with market expectations of a 0.3% rise.

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Performance of various sectors

The economic growth in the UK was mainly driven by the improvement in the service sector, while the growth in the manufacturing and construction sector contracted in the second quarter. The service sector contributed 0.42% to the GDP, while the manufacturing and construction sector posted a fall of 0.4% and 0.9%, respectively. However, the agricultural sector posted moderate growth in the same quarter.

Economic impact

After the UK’s general election in June 2017, the political environment in the UK (EWU) looked uncertain. Consumer sentiment tumbled in June, as investors believed the political environment to be quite unstable. Earlier, major economic indicators saw weakness due to the Brexit shocks. However, now the improving growth figures are strengthening investors’ confidence in the economy. The Eurozone economy (VGK) (IEV) (HEDJ) is also showing a strong recovery.

In the next part of this series, we’ll analyze the indicators investors should watch this week.

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