Surprise lift for economy but volatility remains
The UK economy grew 0.5% in May, defying predictions that it was sliding into recession. Analysts had predicted growth of just 0.1% after it contracted by 0.2% in April.
Every area of the economy expanded including construction, travel and manufacturing, while a large rise in GP appointments helped to boost the services sector by 0.4%, the Office for National Statistics said. Consumer-facing sectors continued a downward trend with a further 0.1% contraction.
Darren Morgan, director of economic statistics at the ONS, said the UK economy had “rebounded” with growth across the main sectors.
Chancellor Nadhim Zahawi said: “It’s always great to see the economy growing but I’m not complacent. I know people are concerned so we are continuing to support families and economic growth .
“We’re working alongside the Bank of England to bear down on inflation and I am confident we can create a stronger economy for everyone across the UK.”
But Rachel Reeves, Labour’s Shadow Chancellor, said: “This shows how growth is still far too slow, when we urgently need to get our economy back on track.
“Over the last decade, Tory mismanagement of our economy has meant not only that growth has plummeted, but that living standards have fallen and real wages have failed to rise.
Ben Jones, CBI lead economist, said: “Economic growth in May was stronger than expected. However, GDP data is volatile at the moment.
“This is in part due to the impact of the Jubilee bank holidays, and this noise will continue to obscure the true state of the economy over the next few months. In reality, CBI surveys and real-time data point to subdued economic momentum.
David Bharier, head of research at the British Chambers of Commerce, said: “Today’s monthly GDP growth figure of 0.5% is welcome news but masks serious underlying issues of growing imbalances within the economy.”
Danni Hewson AJ Bell financial analyst commented: “After all the doom and gloom about the state of the British economy May’s growth figures might have some people wondering what all the fuss has been about. A slight uptick had been anticipated, but at 0.5% the pace of growth has caught many by surprise.
“Construction has had another great month, bolstered by housebuilding in a market that’s only slightly coming off the boil.
“These figures represent just one month – albeit a crucial one because it means the quarter as a whole doesn’t meet the criteria for negative growth – but one month can never tell the whole story.
“There are headwinds that are impossible to ignore. Retailers, hospitality venues, gyms, museums and children’s play centres are all feeling the weight of high inflation.
“Households are strategically cutting back on their spending, which is a particular blow to the consumer services which still haven’t been able to get anywhere near their pre-pandemic glory days.”