--UK Q2 prelim GDP +0.3% vs Q1; +2.1% on yr
--UK Q2 service sector output +0.6% vs Q1, +3.4% on yr
--UK Q2 GDP growth in line with market forecasts
--UK Q2 GDP qtr rate slowest since Q4 1998
--ONS: UK Q2 industry output down entirely on sharp mfg fall
--ONS: UK Q2 construction growth seen slower than Q1
--UK Q2 distribution, catering +0.9% on qtr, +3.8% on yr
--ONS: UK Q2 transport, communication services weakest for 4 yrs
--ONS: UK Q2 business, finance services weaker than Q1

London, July 27 (BridgeNews) - U.K. economic growth slowed to a quarterly rate of 0.3% and an annual rate of 2.1% in the second quarter, compared with growth of 0.5% and 2.7% respectively in the first quarter, the Office for National Statistics said on Friday. It was the slowest quarterly growth rate since the fourth quarter of 1998. There was a steep fall in manufacturing output and a marked slowdown in growth in most service sectors.
Services output rose 0.6% on the quarter and 3.4% on the year, compared with growth of 0.9% and 3.7% in the first quarter. Within the total, distribution, hotels and catering output rose 0.9% on the quarter and 3.8% on the year, up from a quarterly rate of 0.7% in the first quarter. The ONS said this acceleration in growth was entirely due to stronger retail sales.
Elsewhere in the services sector, there was a big slowdown in the transport and communications sector, which has been one of the more dynamic sectors in recent years. The ONS said quarterly growth had been "markedly lower than for any quarter during the past four years." The weakness was spread throughout the constituent components but a part of it was likely to have been caused by ongoing disruption to the railways.
Business services growth also slowed in the second quarter and was estimated to have been lower than the average quarterly growth, while growth in the financial intermediation sector was described as "moderate." The public sector recorded a "relatively small increase" in output, the ONS said.
The figures were in line with expectations and clearly show that growth in most sectors of the economy is slowing. They also highlight the contrasting fortunes of the manufacturing sector and the consumer sector; the former being sucked ever deeper into trouble by weakening global demand and the latter defiantly enjoying some of the strongest growth for years.