The British economy grew by 0.4 per cent in the three months to September, a sharp slowdown from the second quarter and the weakest since the run-up to the Iraq war early last year, official data has shown.
The Office for National Statistics said today it revised up slightly the annual growth rate in the third quarter to 3.1 per cent from 3.0 per cent, but left the quarterly rate unchanged.
Growth slowed considerably from the 0.9 per cent in the second quarter to below trend, supporting the view that the Bank of England has leeway to leave interest rates to await a clearer picture of that slowdown's depth in coming months.
BoE Deputy Governor Ms Rachel Lomax said this week that the MPC judged that growth was probably a bit higher than the unrevised 0.4 per cent estimate, a view that is shared by many economists.
"We're not surprised that the GDP numbers are unrevised. We suspect the true pace of activity was quicker than the 0.4 percent suggested by the ONS," said Mr Philip Shaw, chief economist at Investec.
"Even so neither the headline number nor the details change our assessment of UK economic prospects. We expect the pace of economic growth to be at trend or slightly above for most of the coming year," he said.
Analysts generally agree that the economy's trend growth rate - the pace at which growth can occur on average over a long period - is about 0.7 per cent.
The ONS said household spending growth slowed to 0.5 per cent in the third quarter from 0.6 per cent in the second, also marking the weakest performance since the first quarter of 2003 when the run-up to war dented consumer and business confidence.
That slowdown in spending comes even as official data still show retail sales volumes holding up strongly, although they fell in October for the first time in three months.
Robust services sector growth, at 0.8 per cent on the quarter, was offset by a sharp contraction in industrial output, down 1.4 per cent in part as many oil and gas companies shut down for maintenance during the quarter.
Services sector growth has slowed from the 1.1 per cent quarterly growth rate in the first quarter but remains a prime driver of the British economy.
Manufacturing output fell 1.0 per cent on the quarter after growth of 1.2 per cent in the three months to June.
Government spending rose a hefty 1.4 per cent on the quarter compared with 0.4 per cent in the second, leaving it up 4.7 per cent on the year, the ONS said.
Business investment, however, fell 0.1 per cent on the quarter, which was the first drop and the lowest figure since a 2.2 per cent contraction in the first quarter of 2003.