GDP picks up in Q1 despite monthly dip: ONS

UK GDP increased by 0.5% in Q1 2019, up from a 0.2% rise in the previous quarter, according to the latest ONS statistics.

Related topics:  Finance News
Rozi Jones
10th May 2019
pencil chart green graph stats
"There are concerns that this positivity is being driven by a continuing inventory build-up, and this is expected to unwind as we head toward H2."

Private consumption, government consumption and gross capital formation contributed positively. Additionally, there was a noticeable pickup in growth in the production sector, driven by growth of 2.2% in manufacturing output.

The ONS said the strong quarterly growth is also partly due to low growth in December, which makes the current period look stronger in comparison.

Monthly GDP growth was negative 0.1% in March, as the services and construction sectors contracted.

Phil Smeaton, chief investment officer at Sanlam UK, commented: “Political uncertainty still looms over the UK economy, with the chances of a cross-party Brexit deal appearing less likely by the day. For the time being at least, growth is holding up. Jobs are still being created and wage growth remains strong. But there are concerns that this positivity is being driven by a continuing inventory build-up, and this is expected to unwind as we head toward H2.”

“Despite all the concerns around UK growth, it is ironic that economic weakness in the EU driven by declining industrial activity in Italy and Germany might be dragging down UK growth. As global trade disputes rumble on it would seem that any hopes of stronger EU growth lie with domestic activity, which would provide a welcome boost for the UK.”

Chris Towner, director at JCRA, added: “The UK economy continues to prove its resilience despite Brexit. The unemployment rate is at a 45 year low at 3.9% and wage growth, including bonuses, hit 3.5% at the last count. This morning we saw growth in the first quarter increase by 0.5%, in line with market expectations and clearly stronger than the 0.2% growth we saw in the previous quarter. We saw a similar picture in Europe, with growth doubling from 0.2% in Q4 to 0.4% in Q1.

“Interesting to see a strong contribution to the overall GDP number came from business investment in the UK, which also grew by 0.5% in the first quarter of 2019. Sterling remains pretty much unchanged as the uncertainty of Brexit continues to put the economic fundamentals in the shade. This is a growing concern for Mark Carney, who clearly warned the financial markets last week not to underestimate the risks of tightening interest rates…. time as always will tell.”

More like this
Latest from Property Reporter
Latest from Protection Reporter
CLOSE
Subscribe
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.