THE British economy shrank less than previously estimated in the third quarter but the improvement fell short of economists' expectations, casting a shadow of doubt over the country's sluggish recovery.

But there were also some positive signs in the data released by the Office for National Statistics yesterday, which revealed that gross domestic product contracted 0.2 percent in the July to September quarter.

It was the third and final revision of the third quarter data - improving on earlier estimates that had put the contraction first at 0.4 percent, then 0.3 percent.

The latest revision left the year-on-year fall in gross domestic product unchanged from the second estimate at 5.1 percent.

Economists had expected a greater improvement, with forecasts for the quarter ranging from a 0.1 percent shrinkage to around a 0.2 percent expansion - growth of any kind would have officially ended Britain's worst recession since World War II.

Downward

"While any upward revision to GDP is welcome news, there is no denying the fact that it is a disappointment," said IHS economist Howard Archer.

Previous quarters in the recession were also revised downward by the Statistics Office to a 0.7 percent contraction between April and June and a 0.9 percent fall in the third quarter of last year.

Britain's recovery from its worst economic downturn has lagged behind the United States and the eurozone, which have recorded renewed growth.

The Bank of England and the government both expect Britain to formally exit recession in the fourth quarter.

"While the economy is still hardly racing ahead, latest data and survey point to growth finally getting under way in the fourth quarter," said Archer. "Nevertheless, serious economic and financial obstacles to significant, sustainable growth remain, and we suspect that recovery will be gradual and prone to losses of momentum."

The Statistics Office reported a strong gain in construction, where output increased 1 percent over the third quarter. But output in the service sector fell 0.2 percent, output from production industries fell by 0.9 percent and there was a 0.2 percent decline for manufacturers.