The UK economy grew at its long-run average for the second quarter running during the first three months of 2006 even though retail sales are estimated to have fallen for the first time since the fourth quarter of 2004, official figures showed today. In its preliminary estimate of first quarter GDP, the office of National Statistics revealed that the UK economy grew by 0.6 pct from the previous quarter, in line with expectations. It explained that a sharp deceleration in the rate of growth of the service sector, largely through a 0.7 pct quarterly fall in retail sales, was compensated for by the biggest quarterly pick-up in industrial production for nearly seven years. On a year-on-year basis, economic growth was 2.2 pct, up on the previous quarter's 1.8 pct but in line with market expectations. The annual rate is the highest since the fourth quarter of 2004, when growth stood at 2.6 pct. A more detailed look at today's release shows that the services sector, which accounts for around 73 pct of the UK economy, saw output increase 0.6 pct, down on the fourth quarter's 1.0 pct. That quarterly increase was the lowest since the fourth quarter of 2004, when it also rose by 0.6 pct. The statistics office said the deceleration is largely due to the distribution, hotels and restaurants sector, which failed to grow during the quarter, against the 1.1 pct increase recorded in the fourth quarter of 2005. Within the sector, the statistics office said increased output from wholesale and 'hotels and restaurants' was offset by falls in retailing and motor trades. Within retailing, the largest contribution to the fall in output is from non-food stores. On a year-on-year basis, service sector output was 3.0 pct higher in the first quarter against the 3.1 pct recorded in the fourth quarter.