UK economy grew by more than expected in May, helped by house-building

Over the three months to May, the economy expanded by 0.9%

Britain’s economic output rose by 0.4 per cent in May, a bigger rise than expected and helped by a jump in housing construction, according to official data that will be welcomed by the new government of Prime Minister Keir Starmer.

A Reuters poll of economists had pointed to a 0.2 per cent increase for monthly gross domestic product in May.

The data from the Office for National Statistics revealed a broad-based increase in economic output, with the services, manufacturing and construction industries all growing, the latter up by 1.9 per cent on the month, driven by the housing sector.

Over the three months to May, the economy expanded by 0.9 per cent, the strongest reading since the three months to January 2022, compared with the consensus forecast for a 0.7 per cent expansion.

The Bank of England last month said it expected the economy would grow by 0.5 per cent over the second quarter.

“The economy grew strongly in May, with all the main sectors seeing increases,” ONS Director of Economic Statistics Liz McKeown said. “Many retailers and wholesalers had a good month, with both bouncing back from a weak April.”

Source: Business Times

COMMENT:

Fraser Johns, finance director at Beard, said: “While the three-month picture is a little more shaky, we can be really encouraged by a strong upturn in output in May – especially as it was seen across almost all sectors. Although more recent PMI data shows just how volatile the sector is, the news that both private and public new housing is leading this charge will be welcome to the many that rely on this sector. It is a real example of the resilience we continue to see from firms across UK construction.

“Until we see output and new orders increasing consistently month-on-month, we shouldn’t take anything for granted though. With the election now settled, the hope is we can all pick back up and continue to build momentum during the second half of the year. As we see borrowing conditions improve, with a potential base rate cut in the near future, this will certainly enable more clients to push ahead with plans.

“From our perspective at Beard, the construction sector remains really buoyant with our secured orders at a record high. We continue to prioritise close partnerships with both our clients and our supply chain, as well as a clear focus on both our approach to tendering and our cost plans.”