INSTANT VIEW - GDP revised up to -0.7 percent

LONDON (Reuters) - The economy shrank by a smaller than expected 0.7 percent in the second quarter, after statisticians revised up their estimates for the manufacturing, energy, wholesale and motor vehicles sectors.

KEY POINTS

- Biggest annual GDP drop since records began in 1955

- Biggest annual fall in construction output since records began in 1948

- Biggest annual fall in services sector since records began in 1955

ANALYSTS' REACTION:

COLIN ELLIS - DAIWA SECURITIES, SMBC

"Yesterday, everyone was worried about a downward revision after business investment figures. I think this breakdown is consistent with the chance of seeing positive growth in Q3."

ALAN CLARKE, BNP PARIBAS

"It's a little bit more upbeat than the first estimate but overall it hasn't really rocked the boat. None of the revisions are that dramatic.

"It is interesting that inventories did not snap back in the way some might have expected. This means there is potential for upside over the next quarter or two."

VICKY REDWOOD, CAPITAL ECONOMICS

"The slight upward revision to UK GDP in Q2 is pretty insignificant when set against the near 6% drop in output seen during this recession.

"The breakdown suggests that the recovery is based on pretty fragile foundations. As expected, an easing in the rate of destocking helped to drive some of the improvement from Q1's 2.4% drop in GDP. And government spending posted a robust 0.8% quarterly rise. But neither of these factors will boost growth for much longer.

"We continue to expect a pretty minimal rise in GDP next year."

BRIAN HILLIARD, SOCIETE GENERALE

"I think it is useful to see that private consumption is still falling but at a slower pace. There is still quite a contrast to the performance retail sales which were strongly positive in that quarter. The basic drivers of overall consumption are still a bit weaker."

GEORGE BUCKLEY, DEUTSCHE BANK

"The upward revision was a bit of a surprise but it still shows a fairly steep contraction.

"The most important piece of news is on inventories which continued to fall at a fairly aggressive pace. Given the pace of the inventory decline in the first half of the year, we could get a bounce in the second half."

STEPHEN LEWIS, MONUMENT SECURITIES

"It seems to have benefited from strength in general government spending and weakness in imports which counts as a positive in GDP figures. We had weak business investment figures yesterday but investment is not a big part of GDP."