Economic Growth Seen Across UK Sectors as Economy Recovers in May

July 11, 2024 TruthUSA

Chancellor Rachel Reeves emphasized that achieving economic growth is Labour’s primary national mission.

The Office of National Statistics (ONS) reported growth in the UK economy in May across various sectors including services, retail, and construction.

In May, monthly GDP rose by 0.4 percent, as indicated by the latest data from the ONS. This positive growth followed a stagnant April influenced by adverse weather conditions affecting production and output.

All major sectors—services, production, and construction—contributed positively to GDP growth in May. Services witnessed a 0.3 percent increase, while production and construction output rose by 0.2 percent and 1.9 percent, respectively.

The ONS noted that the additional bank holiday for King Charles III’s coronation impacted GDP estimates for May 2023.

Economic growth was recorded over the previous three months, according to the ONS.

Liz McKeown, the director of economic statistics at the ONS, highlighted that the increase in May was the quickest in over two years but was offset by weaker construction performance.

The economy grew by 0.9 percent in the three months leading to May compared to the three months ending in February 2024. This growth was primarily driven by a 1.1 percent surge in the services sector, marking the strongest quarterly growth since December 2021.

Monthly Growth

Services in May observed positive contributions from wholesale, retail trades, professional activities, and accommodation and food services, which grew by 2.4 percent.

In services, information and communication were the largest negative contributors to growth, declining by 1.4 percent.

Manufacturing bolstered production output with a 0.4 percent increase, led by food and drinks manufacturers.

Construction saw 1.9 percent growth driven by new projects and maintenance work.

Construction experienced its fastest growth rate in nearly a year, with a boost from house construction and infrastructure projects.

The newly elected Labour government has committed to revitalizing the construction industry and aiming to build 1.5 million new homes during their term. Sir Keir Starmer intends to fund additional planning resources and raise stamp duty for non-UK residents.

Chancellor Rachel Reeves stated that Labour is committed to making tough decisions to drive growth and strengthen the economy’s foundation.

She emphasized, “Delivering economic growth is our national mission, and there is no time to waste.”

Another key Labour manifesto pledge, the National Wealth Fund, aims to attract private sector investments to kickstart economic growth.

Months Ahead

In the upcoming month, the Bank of England’s Monetary Policy Committee (MPC) will convene to decide on the interest rate, which currently stands at 5.25 percent. Economists anticipate a rate cut to 5 percent.

However, Pantheon Macroeconomics suggests that strong growth may delay the rate cut until September.

Rob Wood, the chief UK economist at Pantheon Macroeconomics, acknowledged the recovery of the economy from the minor recession at the end of last year.

He cautioned that the exceptional growth figures might require adjustment and anticipates a potential regression in June.

PA Media contributed to this report.

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