UK economy gained momentum at end of 2015

The U.K. economy gained a little momentum at the end of last year, thanks entirely to the services industry.

Gross domestic product rose 0.5 percent in the fourth quarter from the previous three months, when it expanded 0.4 percent, figures from the Office for National Statistics published Thursday showed. The increase was in line with the median estimate of economists in a Bloomberg survey

While output has expanded for 12 straight quarters and unemployment is at its lowest rate for a decade, Bank of England policy makers are focusing on the global risks to the British economy. They will announce their latest interestrate decision and publish new growth and inflation forecasts on Feb. 4.

BOE Governor Mark Carney said this week that domestic cost pressures need to pickup to justify increasing the benchmark interest rate from 0.5 percent, where it's been since 2009. Some economists now see borrowing costs staying at a record low for another year. The economy grew 1.9 percent in the fourth quarter from a year earlier, the slowest annual rate since the start of 2013.

The pound increased its gains after the data were published and was trading at $1.4295 as of 9:33 a.m. in London, up 0.4 percent from Wednesday. Thursday's figures underline the economy's continued reliance on consumers, who are benefiting from rising employment, falling oil prices and real wage growth.

Services, which account for about 79 percent of GDP, saw growth accelerate to 0.7 percent from 0.6 percent in the previous quarter with business services and finance leading the way. Industrial production fell 0.2 percent, with manufacturing unchanged and utilities and mines cutting output. Construction output fell 0.1 percent.

Britain also faces the possibility of a referendum on whether to stay in the European Union an early as June. ProEU campaigners say a decision to leave the bloc the U.K. joined in 1973 would hit investment and employment and send the pound tumbling.

The latest GDP data come a day before the U.S. publishes its estimate for the fourth quarter, with economists predicting annualized growth of 0.8 percent following 2 percent in the third. Federal Reserve policy makers on Wednesday acknowledged the global economic risks in a statement that economists interpreted as diminishing the chances of a March rate increase. Annualized growth in the U.K. in the fourth quarter was 2 percent following 1.8 percent in the third.

U.K. growth slowed to 2.2 percent in 2015 from 2.9 percent in 2014, the ONS said. The International Monetary Fund forecasts that it will expand 2.2 percent this year, and that the U.S. will grow 2.6 percent. The fourth-quarter report is the first of three estimates from the statistics office and may be revised, as it's based on about 44 percent of the information that will ultimately be available.