Economy

GDP recovers with 0.3% growth in May

GDP recovers with 0.3% growth in May

It expanded by the same amount compared to April, when shutdowns at vehicle makers and other no-deal hiatus dragged activity into negative territory, curtailing overall GDP by 0.4pc.

Allaying fears of a recession, the Office for National Statistics said UK GDP rose by 0.3% in May from a month earlier, when stoppages at vehicle plants across the country dragged the economy into contraction.

In fact, output in the three months to May ended up being 0.3% higher than in the previous three-month period, exceeding forecasts for growth of 0.1%.

Factory output rose by 1.4% on the month, following a sharp drop of 4.2% in April, with the ONS finding that a partial bounceback from vehicle production had driven up growth.

This was mainly due to the partial recovery in vehicle production, ' ONS statistician Rob Kent-Smith said.

Services also reported flat output in May, as it slowed down from 0.1% growth in April. "This was mainly due to the partial recovery in vehicle production", he added.

However, analysts remain gloomy about the outlook for the economy in the second quarter, which runs from April to June.

More news: Bond yields creep higher as markets wait for Fed signals

Overall, the economy performed better in May than what many economists had forecast.

"Despite this, there has been a longer-term slowdown in the often-dominant services sector since summer 2018", Smith said.

Ben Brettell, senior economist at Hargreaves Lansdown, was quoted by Sky News as saying that "storm clouds look to be gathering over the United Kingdom economy as consumers and business remain hamstrung by Brexit uncertainty".

The ONS revised its growth estimate for March to 0.1%, when previous figures had suggested that the United Kingdom economy shrunk by 0.1% in that month.

The figures follow disappointing purchasing managers' index (PMI) figures, which showed shrinkage in the manufacturing and construction industries, while the services sector stagnated.

Figures from the British Retail Consortium this week showed annual consumer spending growth slowed in June to the weakest rate since records began in 1995. "The Q2 figure is due to be released on 9 August".


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