United Kingdom economic growth exceeds forecasts in May, driven by British carmakers

Darnell Taylor
July 11, 2019

"The increase was driven by auto makers who began production again in May, having in many cases stopped in April in case Brexit disrupted their supply chain".

If the reading here comes in within expectations (+0.3% m/m), economists anticipate that it would require the United Kingdom economy to grow by a whopping 0.8% m/m in June to even post flat growth in Q2 2019.

Rolling three-month growth in the construction sector slowed for the second month in a row, while month-on-month growth in the sector was 0.6%, representing a recovery from the negative growth seen in the previous two months. The ONS warns that single-month growth figures can prove volatile, preferring to assess the economy over a three-month period.

Commenting on the figures, head of GDP at the ONS Rob Kent-Smith said: "GDP grew moderately in the latest three months, with IT, communications and retail showing strength".

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

A Mini electric vehicle rolls down the production line at the BMW plant in Cowley, near Oxford.

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Ben Brettell, senior economist at Hargreaves Lansdown, added: "UK GDP rebounded 0.3% in May, having lost 0.4% in June, today's ONS release showed".

May's overall GDP bounce-back, which comes after two consecutive contractions, was in line with analyst sentiment, who predicted the return to growth.

Last month, the BoE said that it expected economic growth to flatline during in the second quarter (Q2) of the year, after the United Kingdom recorded 0.5% growth in the previous quarter.

The UK economy bounced back to monthly growth in May as a recovery in vehicle production drove a rise in output. More worryingly, PMI data releases last week covering the manufacturing, construction and services sectors suggested the economy could actually have shrunk in Q2.

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.

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