The º£½ÇÊÓƵ economy saw stronger-than-anticipated growth in May as shoppers returned to high streets and construction work bounced back, according to official data from the Office for National Statistics (ONS). The ONS reported that gross domestic product (GDP) rose by 0.4% in May, following a period of stagnation in April when consumer spending was impacted by unfavourable weather conditions.
Economists had initially projected a 0.2% increase in GDP for May. Liz McKeown, ONS director of economic statistics, commented: "The economy grew strongly in May, with all the main sectors seeing increases."
She added: "Many retailers and wholesalers had a good month, with both bouncing back from a weak April."
McKeown also noted that "Construction grew at its fastest rate in almost a year after recent weakness, with housebuilding and infrastructure projects boosting the industry."
The services sector continued to be a primary driver of economic growth across the º£½ÇÊÓƵ, according to the ONS, experiencing its fifth consecutive month of growth.
Retailers enjoyed a particularly successful month, with trade increasing by 2.9% in May, recovering from a 1.8% decline the previous month, which had been attributed to poor weather. Accommodation and food services, encompassing hotels and restaurants, also demonstrated strong performance, achieving 2.4% growth.
In other areas, the construction industry witnessed a 1.9% increase in output, with growth observed in both new work and maintenance. Despite this positive rebound, the sector experienced an overall contraction over the three months leading up to May, as it grapples with the ongoing challenges posed by high interest rates.
The º£½ÇÊÓƵ's economy unexpectedly picked up the pace in May, bolstering prospects of outperforming the Bank of England's forecast of 0.5% growth for Q2, unless June faces a considerable downturn.
This comes as a welcome lift for the incumbent Government, which counts on economic expansion to generate higher tax income for funding its ambitious expenditure plans.
Chancellor Rachel Reeves said: "Delivering economic growth is our national mission, and we don't have a minute to waste."
These encouraging statistics follow a 0.6% surge in Q1 of 2024, signalling a recovery from a modest recession that marked the latter part of 2023.
Pantheon Macroeconomics' lead º£½ÇÊÓƵ economist, Rob Wood, remarked: "The º£½ÇÊÓƵ economy is well and truly putting last year's minor recession behind it."
Notably, the economy has grown by 1.5% in the current year, with three-month growth hitting its highest rate since January 2022.
However, Wood noted a cautious tone: "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."
