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GDP shrinks by 0.4% in April

Strong manufacturing figures in February and March were consistent with an increase in activity ahead of the UK’s originally-intended departure date from the European Union.

Rozi Jones
|
10th June 2019
decline graph chart down decrease drop
"GDP growth showed some weakening across the latest three months, with the economy shrinking in the month of April mainly due to a dramatic fall in car production"

Monthly GDP growth shrank by 0.4% in April as the production sector and manufacturing sub-sector contracted, according to the latest ONS statistics.

Monthly growth in production was negative 2.7% in April, driven by manufacturing, which contracted by 3.9%.

The ONS says strong manufacturing figures in February and March were consistent with an increase in activity ahead of the UK’s originally-intended departure date from the European Union.

The weaker picture in April 2019 was in line with a fall back from early completion of orders in the first quarter of 2019.

This is the second consecutive month of falls following a 0.1% drop in March.

Rolling three-month growth was 0.3% in April 2019, down from 0.5% in March, but on par with growth rates at the start of 2019.

Rob Kent-Smith, head of GDP at the ONS, said: “GDP growth showed some weakening across the latest three months, with the economy shrinking in the month of April mainly due to a dramatic fall in car production, with uncertainty ahead of the UK’s original EU departure date leading to planned shutdowns.

“There was also widespread weakness across manufacturing in April, as the boost from the early completion of orders ahead of the UK’s original EU departure date has faded.”

Alessandro Capuano, global head of brokerage and business development at Fineco Bank, commented: “Political uncertainty is finally taking a toll on the UK economy. After a resilient start to the year fuelled by Brexit stockpiling efforts, maintaining that momentum is proving to be a challenge. Last week we saw the first red signs following gloomy reports on the manufacturing and construction industries. Following a positive Q1 mainly driven by an increase in inventory build-up, Q2 is proving to be rather disappointing.

“It is ironic that the economic weakness in the EU is one of the main reasons dragging down UK growth. As key drivers through a positive Q1, private consumption and government spending need to continue to boost the UK economy. At the same time, there is a need to pick up net trade in order to revert the situation and see economic growth again.”

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