The Office for National Statistics said gross domestic product increased by 0.4% in May, after no growth was recorded in April when damp weather hit consumer spending
The UK economy experienced a faster than anticipated growth in May, as shoppers returned to the high streets and construction work picked up, according to official data.
The Office for National Statistics (ONS) reported that the gross domestic product (GDP) rose by 0.4% in May, following a stagnant April due to poor weather impacting consumer spending. Economists had previously forecasted a GDP increase of only 0.2% for May.
Liz McKeown, ONS director of economic statistics, commented: “The economy grew strongly in May, with all the main sectors seeing increases. Many retailers and wholesalers had a good month, with both bouncing back from a weak April.”
Construction saw its fastest growth rate in nearly a year after recent sluggishness, with housebuilding and infrastructure projects giving the industry a boost. The services sector continued to be a major contributor to the UK’s economic growth, marking its fifth consecutive monthly increase, according to the ONS.
Retailers reported a particularly strong month, with a 2.9% increase in trade for May, rebounding from a 1.8% decline in April due to unfavourable weather conditions. Accommodation and food services, encompassing hotels and restaurants, also performed well, recording a 2.4% growth. Meanwhile, the construction industry witnessed a 1.9% growth in output, with an uptick in both new work and maintenance.
However, despite this recovery, the sector contracted over the three months leading up to May, continuing to face challenges from high interest rates. The robust performance in May could put the UK’s economy on track to exceed the Bank of England’s forecast of 0.5% growth for Q2, provided there’s no significant downturn in June.
It marks an early windfall for the new Government that is banking on economic growth and consequently, increased tax revenues, to fund its spending plans. Chancellor Rachel Reeves said: “Delivering economic growth is our national mission, and we don’t have a minute to waste.”
These promising signs follow a 0.6% growth in Q1 of 2024, which served as a comeback from a minor recession experienced during the latter half of 2023. Rob Wood, chief UK economist at Pantheon Macroeconomics asserts, “The UK economy is well and truly putting last year’s minor recession behind it.”
“GDP has risen 1.5% so far this year, and three-month-on-three-month growth reached the highest since January 2022. But these growth numbers feel a bit too good to be true they are much stronger than business surveys so we assume some payback in June.”
