Latest economic data confirms that the UK economy has recovered from a soft patch earlier in the year and is now growing at a pace that is well above potential. According to new ONS statistics published this morning, the UK economy expanded by 0.7 per cent in the 3 months to August after growing by 0.4 per cent in the second quarter (three months to June).

The outturn was slightly higher than the 0.6 per cent monthly GDP forecast that we published last month for the same period and the error is partly because of back data revisions. Building on the official data, our monthly GDP Tracker suggests that the economy will expand by 0.7 per cent in the third quarter and by 0.5 per cent in the final quarter of this year.

The biggest surprise was from the production sector and, in particular, manufacturing output which expanded by 0.8 per cent. This strength was across the board and the outturn was above our forecast for the same period, partly because of changes to the back data.