The release of recent data indicating a 0.2 percent growth in January has bolstered the prospects of the U.K. swiftly recovering from recession. According to the Office for National Statistics, the expansion of the service and construction sectors has contributed to the overall increase in national output, marking only the second instance of growth in the past seven months.
The 0.2 percent growth in services during January was primarily driven by a significant 3.4 percent surge in spending both in physical stores and online. Additionally, the construction sector experienced a 1.1 percent rise. However, the production sector, which encompasses manufacturing, contracted by 0.2 percent.
Read more: U.K. inflation plummets, investors eye rate cuts
Comparing the three-month period up to January, the GDP was 0.1 percent lower than the three months leading to October 2023. Furthermore, it was 0.2 percent smaller than the three-month period concluding in January 2023.
Srong growth in retail and wholesaling sectors
According to Liz McKeown, director of Economic Statistics at the Office for National Statistics (ONS), there was an improvement in the economy during January. Strong growth was observed in the retail and wholesaling sectors, while the construction industry also performed well. Housebuilders, in particular, had a positive month after a period of relative sluggishness in the past year.
However, there were some areas that experienced declines, including TV and film production, lawyers, and the pharmaceutical industry, which is known for its occasional volatility, McKeown added.
She further noted that when considering the overall three-month period, the economy experienced a slight contraction.
The government breathed a sigh of relief as the financial markets anticipated an uptick in activity following a 0.1 percent contraction in December. Economists had predicted a consensus forecast of a 0.2 percent increase, providing a glimmer of hope amidst the U.K’s ongoing shallow recession caused by output declines in the third and fourth quarters of 2023.
Commenting on the January GDP figures, U.K. Chancellor Jeremy Hunt expressed that despite the challenges faced in recent years, the numbers indicate a positive trajectory in the growth of the economy.
For more news on the economy, click here.
