THE economy grew more rapidly than first estimated in the opening three months of the year, but the upward revision to gross domestic product was marginal and the quarterly growth rate stayed below trend.

The Office for National Statistics said GDP increased by 0.5% in the first quarter of this year, a decimal point higher than it had calculated last month.

Year-on-year growth was also revised up from 2.8% to 2.9%, but the figures for non-oil GDP were unchanged at 0.5% and 2.9% respectively.

The latest figures did nothing to alter the impression that interest rates have peaked at 7.25% in the current cycle, but that there is enough concern about inflation prospects to delay a reduction until later this year or even next year.

Despite the revision to the figures, the economy is clearly slowing down from the hectic pace recorded in the middle of last year when it grew by 0.9% in the second quarter and then matched that rate in the third. By the final quarter growth had declined to 0.6%. The fastest- growth rate was recorded in the final quarter of 1996 when it hit 1.1%.

Much of the fresh news was in the detail provided by the output, income, and expenditure tables. Construction output grew by 1.1% in the quarter and was 3.3% higher than in the same three months of last year, a clear indication that this sector of the economy is at last staging a recovery from the recession, which in its case lasted for five years.

Output is still 4.5% below its 1990 level.

Agriculture also staged a recovery with growth of 0.5% after two successive quarters of decline.

Farming output has declined by 6.5% in the last two years since the EU beef ban was imposed.

Elsewhere the story was another chapter of the tale of two cities, with industrial production falling by 0.3% while services increased output by 0.7%, a significant slowdown from the 1.2% rise in the fourth quarter of last year.

Government services declined by 0.2% in the latest quarter and were only 0.2% higher than in the first quarter of 1997.

Consumer spending increased by 1% in the quarter, in line with retail sales, but this was a slowdown from the 1.4% recorded in the final quarter of last year.

Investment rose by 1.3% after 1% in the previous quarter, but in the manufacturing sector at least it is expected to tail off from here.

Stockbuilding contributed 0.75% to GDP.

Unwinding of stock positions is a downside risk for growth in the second half of the year.

Net trade reduced GDP by 0.5%.

Income from employment was 2% higher than in the final quarter of last year: the year-on-year increase was 6.5%. Hence the concern about earnings growth.

Francesca Massone at Goldman Sachs said: ''Consumer expenditure remains the main driving force behind GDP growth, Despite the weak retail sales numbers in April, we expect consumer spending to remain strong in 1998,

''This view is supported by the recent pick up in consumer confidence and the continued tightness of the labour market.

Net trade is expected to remain a significant drag on GDP for the whole of 1998.

''Until there are clear signs that the economy is slowing significantly and the labour market is easing, it is too early to conclude that interest rates have peaked.''