UK economic system grows 0.5% in Could
The UK economic system has stunned us with 0.5% progress in Could, following April’s 0.2% decline (revised from a 0.3% drop). Development was fuelled by a increase in vacation bookings and a big rise in GP appointments.
And over the three months to Could, GDP rose 0.4%, in keeping with figures from the Workplace for Nationwide Statistics. Economists had anticipated zero progress in Could alone, and within the three months to Could, amid the price of residing disaster.
Key occasions:
Filters (BETA):
Suren Thiru, economics director for the Institute of Chartered Accountants in England and Wales, warns that the UK economic system stays “perilously near recession” regardless of the higher than anticipated 0.5% progress in Could.
The newest figures affirm that there was a greater than anticipated rally in financial exercise in Could. Whereas all sectors reported strong progress, the important thing providers sector was the biggest contributor to total GDP progress, reflecting a big rise in GP appointments.
Strong progress in Could must be adopted by a notable drop in output in June because the working days misplaced as a result of Jubilee financial institution vacation and surging inflation – together with from file gasoline costs – drag on exercise.
The UK economic system stays perilously near recession. Extended political uncertainty might weaken financial situations by stifling funding and including to inflation, by way of triggering additional falls in sterling’s worth.
Whereas focused fiscal assist is required to guard folks and companies who’re being hardest hit, extra focus is required to ease the availability aspect constraints that proceed to stoke inflation and restrict financial exercise.
Here is one thing necessary in regards to the newest #GDP information that the majority will miss… 🤓
Excluding #NHS Check and Hint and the vaccines, UK GDP rose by 0.7% m/m in Could and by between 0.4% and 0.8% in every of the primary 5 months of the 12 months 👍
supply: https://t.co/L28b5gOxfX pic.twitter.com/9i7fZyhYq5
— Julian Jessop 🇬🇧 🇺🇦 (@julianHjessop) July 13, 2022
Summer season within the Metropolis of London: because the mercury climbs you may depart your tie at house – and even courageous a pair of shorts and trainers, writes my colleague Joanna Partridge.
Corporations primarily based within the capital’s monetary district have for years adhered to extra conventional costume codes than different employers, with many companies demanding “enterprise informal” from their workers, regardless of the climate.
But within the post-pandemic, extra versatile world of labor, staff are figuring out tips on how to stay workplace applicable whereas making an attempt to beat the warmth, when the mercury reaches 30C, because it did in central London on Tuesday.
A striped bow tie, linen jacket and straw hat had been one regulation agency worker’s concessions to the temperature.
“I often put on an extended tie however I really feel much less encumbered with this [bowtie],” mentioned Jake, who didn’t need to give his surname. “I’m not able to let go of ties utterly.”
Carrying his briefcase as he walked alongside Cornhill, he mentioned he wouldn’t often put on a linen jacket: “However when it’s too sizzling I make an exception. I’m not superb within the warmth.”
An open white or blue shirt worn with trousers or chinos gave the impression to be the unofficial uniform amongst males, whereas there was higher selection among the many outfits worn by feminine employees.
Victoria Scholar, head of funding at interactive investor, sums up the GDP figures and appears at what they imply:
UK GDP rose by 0.4% within the three months to Could topping expectations for 0% whereas month-to-month progress elevated by 0.5% in Could, additionally forward of estimates for 0% and swinging from a unfavourable studying of -0.2% in April. Companies, manufacturing and development all posted constructive progress with providers output the biggest contributor, rising 0.4% in Could because of a soar in GP appointments, lifting month-to-month GDP to 1.7% above its pre-pandemic ranges. Nevertheless, consumer-facing providers fell by 0.1% in Could pushed by a drop in retail commerce together with motorcar and bike restore providers.
Amid fears of a recession, disappointing retail gross sales figures and file low shopper confidence information, this morning’s figures come as a welcome reprieve with this morning’s constructive GDP figures allaying some progress considerations after April’s shock unfavourable studying. Regardless of the wind-down of the NHS take a look at and hint and vaccination programmes, well being was the largest contributor to progress. The surge in post-pandemic demand for worldwide journey and the transportation of products throughout the nation additionally contributed to Could’s enlargement.
The pound is buying and selling modestly greater towards the US greenback however continues to be languishing near two-year lows as latest buck power continues to weigh on quite a lot of currencies together with sterling and as UK political and financial uncertainty stays.
Kitty Ussher, chief economist on the Institute of Administrators, mentioned:
That is reassuring information for enterprise leaders, who we all know have been feeling apprehensive in regards to the state of the economic system.
Though consumer-facing providers are nonetheless beneath their pre-pandemic ranges, its necessary to do not forget that this class contains commuter journey so can have been completely affected by the shift to home-working.
And whereas many individuals are undoubtedly feeling the stress on family payments, the a lot publicised weakening in retail gross sales can also be partly offset by customers switching again to spending on the separate class of tourism journey.
General there’s nothing on this information that can forestall the Financial institution of England from persevering with to lift rates of interest when it meets over the summer time.
The ONS talks of “elevated confidence in vacation reserving following the top of Covid restrictions”.
In the meantime, retail gross sales had been down 0.5% in Could.
Right here is our story on the UK’s return to progress in Could.
Month-to-month GDP is now estimated to be 1.7% above its pre-pandemic ranges (February 2020).
Manufacturing grew by 0.9% in Could, pushed by 1.4% progress in manufacturing and a 0.3% rise in electrical energy, fuel, steam and air con provide.
Building output elevated by 1.5% in Could and is now at its highest stage since month-to-month data started in 2010.
Extra response.
First rate UK #GDP numbers for Could (in line with message from PMIs)… 👍
Headline progress of 0.5% helped by extra GP appointments – however that is nonetheless exercise which improves welfare.
Different providers holding up effectively given #inflation disaster, and manufacturing and development each up. pic.twitter.com/ETnbU9QZY1
— Julian Jessop 🇬🇧 🇺🇦 (@julianHjessop) July 13, 2022
Companies output rose 0.4% in Could, as human well being and social work actions grew by 2.1%. There was a “giant rise in GP appointments” in Could, which offset the cutting down of the NHS take a look at and hint and Covid-19 vaccination programmes, the ONS mentioned.
Solely within the UK would a soar in GP appointments set off an upside shock in GDP information throughout a value of residing disaster https://t.co/iCl0woSfwe
— Anthony Barton (@ABartonMacro) July 13, 2022
The brand new chancellor of the exchequer, Nadhim Zahawi, was fast to answer the figures.
It’s all the time nice to see the economic system rising however I’m not complacent. I do know persons are involved so we’re persevering with to assist households and financial progress.
We’re working alongside the Financial institution of England to bear down on inflation and I’m assured we are able to create a stronger economic system for everybody throughout the UK.
UK economic system grows 0.5% in Could
The UK economic system has stunned us with 0.5% progress in Could, following April’s 0.2% decline (revised from a 0.3% drop). Development was fuelled by a increase in vacation bookings and a big rise in GP appointments.
And over the three months to Could, GDP rose 0.4%, in keeping with figures from the Workplace for Nationwide Statistics. Economists had anticipated zero progress in Could alone, and within the three months to Could, amid the price of residing disaster.
Information in a single day: Twitter sued Elon Musk on Tuesday to power him to finish his $44bn takeover of the social media big after he introduced on Friday he would withdraw his bid, writes our west coast expertise reporter Kari Paul.
“Musk’s exit technique is a mannequin of hypocrisy,” the lawsuit mentioned, accusing the billionaire of creating “unhealthy religion” arguments towards Twitter and finishing up “public and deceptive assaults” on the corporate.
The go well with has kicked off what may very well be an extended authorized saga concerning the failed merger. The Tesla CEO and richest man on Earth had reached a deal to purchase Twitter on 25 April, providing to buy all the firm’s shares for $54.20 every, however he started to again out over allegations of “spam” accounts on the platform.
The UK’s failure to get critical about inequality and weak progress over the previous 15 years has left the common British family £8,800 poorer than its equal in 5 comparable international locations, analysis has discovered, writes our economics editor Larry Elliott.
A “poisonous mixture” of poor productiveness and a failure to slender the divide between wealthy and poor had resulted in a widening prosperity hole with France, Germany, Australia, Canada and the Netherlands, the report from the Decision Basis mentioned.
The thinktank mentioned that if the UK matched the common earnings and inequality ranges of these international locations, typical family incomes in Britain can be a 3rd greater and people of the poorest households two-fifths higher.
Introduction: UK GDP report due amid value of residing disaster
Good morning, and welcome to our rolling protection of enterprise, the world economic system and the monetary markets.
We’ll get a brand new well being test on the UK economic system this morning as Could’s GDP numbers are launched.
The official information, due at 7am BST, comes amid considerations that Britain may very well be hurtling in direction of recession, as households and companies are gripped by a value of residing disaster.
Analysts are forecasting that Britain’s economic system floor to a halt within the three months to Could, following 0.2% progress within the earlier three months. GDP in Could alone can also be forecast to indicate no change, after April’s 0.3% decline.
We’re additionally getting UK commerce and industrial manufacturing figures on the similar time, in addition to the ultimate estimate for German inflation in June (forecast: 7.6%), adopted by last estimates for French and Spanish inflation a bit later.
Michael Hewson, chief market economist at CMC Markets UK, mentioned:
The newest April GDP numbers confirmed that the UK economic system contracted by 0.3%, a a lot greater decline than was anticipated. On the face of it the numbers had been very disappointing, nevertheless the autumn was largely pushed by the top of the NHS take a look at and hint program, because the Covid free testing regime got here to an finish. On condition that this can be a one-off impact, and received’t be repeated, the precise numbers, though poor, weren’t as unhealthy as they seem, regardless of the troublesome macro backdrop.
As we glance to at present’s Could numbers the outlook isn’t doubtless to enhance considerably even when we see a modest enchancment. Gasoline costs are set to go even greater with day by day reviews of file highs for diesel in addition to petrol, because it turns into increasingly costly to refill. Sooner or later it will result in demand destruction as customers prioritise spending on necessities.
Philip Shaw, chief economist at Investec, mentioned:
It’s doubtless the rising value of residing continued to affect the UK economic system, which is unlikely to be offset by a possible rebound within the manufacturing sector from a weak April. We count on that UK GDP contracted by 0.2% in Could, relative to April.
What is going to doubtless be the most-watched launch is the US CPI [consumer price index] report. Final month’s surprising soar to eight.6%, when many thought inflation had peaked, helped set off the Fed’s 75 foundation level fee improve.
This afternoon, the spotlight is US inflation for June, with economists forecasting an increase to a brand new 40-year excessive of 8.8% from 8.6%.
The Financial institution of Canada is anticipated to lift rates of interest once more at present, by 75 foundation factors to 2.25%, foreshadowing an identical transfer by the US Federal Reserve on the finish of this month.
On the markets, the euro stays in focus. The only forex was inside a whisker of hitting parity towards the greenback yesterday, hit by fears of recession and an power provide disaster, and sank to $1.00001 at one stage. It’s now buying and selling at $1.003, its lowest stage in 20 years and down nearly 12% this 12 months. The pound additionally hit a contemporary two-year low beneath $1.19 yesterday, and is at the moment at $1.1901, up 0.1% on the day.
Asian inventory markets have eked out some modest features, with Japan’s Nikkei rising 0.4%, Hong Kong’s Cling Seng and the Shanghai composite gave up earlier features and had been flat. European inventory markets are anticipated to slide on the open.
The Agenda
- 9am BST: Worldwide Vitality Company oil market report
- 10am BST: Eurozone industrial manufacturing for Could
- 1.30pm BST: US inflation for June (forecast: 8.8%)
- 3pm BST: Canada rate of interest determination (forecast: 2.25% from 1.5%)
