Data released on Wednesday by the Office for National Statistics (ONS) revealed that Britain’s economy experienced a slight increase in April, thanks to contributions from the retail sector and the film industry.
This positive development comes in the face of contractions in the manufacturing and construction sectors, indicating a trend of slow growth rather than a recession.
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Steady growth in April
According to the ONS, Britain’s economy grew by 0.2% on a month-on-month basis in April, aligning with the consensus among economists in a Reuters poll. Despite this modest growth, financial markets exhibited little reaction to the figures.
In contrast, recent data on labour market conditions and inflation had raised expectations of higher interest rates from the Bank of England.
Business surveys indicate weak activity, but no recession
The data released on Wednesday resonates with business surveys that suggest sluggish activity but dismiss the likelihood of a recession, which had been widely anticipated just a few months ago.
Over the three months leading up to April, the economy of Britain expanded by a mere 0.1%, prompting the British Chambers of Commerce to label it a “low growth trajectory.” Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics, anticipates that GDP in Q2 will remain unchanged from Q1.
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By GlobalDataStrikes and coronation impact GDP
Public sector strikes and the lost working day due to the King’s coronation ceremony in May have impacted the economy. Tombs estimates these factors likely inflicted a 0.2% point blow to GDP in May.
Health sector strikes affect growth
The ONS stated that the health sector had the most significant negative influence on growth in April. The occurrence of four days of junior doctor strikes during that period contributed to this outcome.
Services sector drives
Growth Despite the challenges faced by other sectors, the services industry demonstrated resilience. Services output increased by 0.3% in April, with the wholesale and retail trade as the primary growth driver.
The information and communications sector also made a notable contribution, with the film and TV industry standing out in particular.
Contractions in manufacturing and construction
While the services sector thrived, the manufacturing output experienced a decline of 0.3%. Additionally, the construction sector unexpectedly contracted by 0.6%, further hindering overall economic growth.
Ultimately, although Britain’s economy displayed slow growth in April, the retail and film industry contributions helped prevent a downturn. Despite contractions in manufacturing and construction, the overall economic trajectory remained positive.
