Economy is growing faster than expected, expert says
The UK economy grew by 0.6% from January to March, marking the nation’s official exit from recession.
Real gross domestic product (GDP) increased by 0.4% in March 2024, continuing the growth from the previous month’s 0.2% rise. The growth in February was adjusted up from an initial estimate of 0.1%. January 2024 saw an unrevised increase of 0.3%.
The 0.6% quarterly increase in GDP averted a third consecutive fall, following a downturn of 0.3% in the final quarter of 2023 and a slight decline of 0.1% in the third quarter of the same year.
GDP grew 0.6% in Quarter 1 (Jan to Mar) 2024 after two quarters of declines.
— Office for National Statistics (ONS) (@ONS) May 10, 2024
• Services grew by 0.7%
• Production grew 0.8%
• Construction fell 0.9%
Read more ➡️ https://t.co/Ipaai6WSar pic.twitter.com/cyUCnuj6aM
GDP figures released by the Office for National Statistics on Friday also showed services output, a significant component of GDP growth, rose by 0.5% in March, up from a 0.3% increase in February, which itself was revised from the earlier reported 0.1% growth. Over the three-month period to March 2024, the services sector expanded by 0.7%.
Production output saw a modest increase of 0.2% in March following more robust growth of 1% in February, which was revised slightly downward from 1.1%. The production sector showed overall growth of 0.8% in the three months to March.
However, the construction sector experienced a downturn, with output decreasing by 0.4% in March after a substantial 2% drop in February, revised from an initial fall of 1.9%. Over the three-month period, construction output declined by 0.9%.
“After two quarters of contraction, the UK economy returned to positive growth in the first three months of this year,” said Liz Mckeown, ONS director of economic statistics.
“There was broad-based strength across the service industries with retail, public transport and haulage, and health all performing well. Car manufacturers also had a good quarter. These were only a little offset by another weak quarter for construction.
“In the month of March, the economy grew robustly, led again by services with wholesalers, the health sector and hospitality all doing well.”
According to Nicholas Hyett, investment manager at Wealth Club, not only is the UK back in the black, but the economy is growing faster than expected.
“An upgrade to February’s growth estimate and strong performance in March means the 2023 recession is rapidly receding in the rear view mirror – ending almost as soon as it had started,” Hyett said. “Perhaps most reassuring is the broad base of growth – with positive developments across everything from retail to manufacturing.
“Construction remains the one area of weakness, particularly in the commercial sector. That’s no surprise as real estate is particularly exposed to the effect of higher interest rates, and the upheaval of the pandemic is still rocking the office and retail sector – with increased home working and online shopping permanently changing demand. That’s not a trend that’s unique to the UK.
“The Bank of England will be particularly pleased with itself looking at these numbers. With the economy looking healthy, a rate cut on Thursday would be looking premature now.”
Any thoughts on the state of the UK economy? Let us know by leaving a comment in the discussion box at the bottom of the page.
