UK services lift growth in May in rebound from bleak winter
The U.K. economy is bouncing back from a near standstill in the first quarter, led by services such as retailing and computer programming.
Gross domestic product increased 0.2 percent in the three months through May, the Office for National Statistics said in its first publication of rolling monthly growth figures on Tuesday. In the month of May, output gained 0.3 from April.
The figures support Bank of England Governor Mark Carney’s argument that the slump at the beginning of the year was temporary and weather related. Policy makers are considering whether to raise interest rates as early as next month if evidence suggests the economy is expanding fast enough to stoke domestic inflation pressures.
The change in format for the GDP release means that the BOE won’t have a full second-quarter estimate of growth when it meets next month. Carney has nevertheless said that the rate- setting panel will have enough information to make a decision.
Tuesday’s report suggests growth will accelerate in the second quarter from the first, when it slowed to a meager 0.2 percent. Services would have to fall 1.7 percent in June to have a neutral impact on the period, and construction would have to decline 1.5 percent.
Recent evidence suggests that England’s success in the World Cup soccer tournament is boosting U.K. consumer spending. On the other hand, uncertainty over Britain’s departure from the European Union continues to weigh on the outlook.
Construction output surged 2.9 percent in May, the most in more than two years, extending a rebound from a snow-blighted first quarter. Manufacturing production gained a weaker-than- expected 0.4 percent.
Nine of the 13 manufacturing sectors saw output rise last month, with pharmaceutical products and transport equipment contributing most to the gain. Overall industrial production unexpectedly fell, hurt by a shutdown at the Sullom Voe oil and gas terminal in the North Sea.
Separate figures showed the trade deficit in goods was little changed at 12.4 billion pounds. The overall trade gap narrowed.
Source: Bloomberg
