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UK economy receives surprise boost after month of zero growth

People outside cafes and pubs in Soho, central London, UK. April 12, 2021.
People outside cafes and pubs in Soho, central London, UK. April 12, 2021. Copyright Alberto Pezzali/Copyright 2021 The AP. All rights reserved
Copyright Alberto Pezzali/Copyright 2021 The AP. All rights reserved
By Eleanor Butler
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May's output was lifted by an uptick in the services sector as sunshine boosted consumer spending.


UK GDP grew by 0.4% month-to-month in May, the Office for National Statistics (ONS) confirmed on Thursday.

The reading comes after a flat result in April and is double the total predicted by analysts.

Growth was primarily driven by services output, which rose by 0.3% - the fifth consecutive monthly jump.

Production output was also up 0.2%, while construction increased by 1.9%.

This is positive news for the sector previously affected by wet weather as construction dropped by 1.1% in April.

"It's amazing what a bit of warm weather can do," said Danni Hewson, head of financial analysis at AJ Bell.

"As temperatures soared to record highs for the month of May, shoppers shopped, builders built and lots of us downed a nice cold pint."

Even so, Hewson suggested that monthly figures can’t necessarily forecast longer trends.

"July is already looking a bit soggy and even if England can bring the Euros home, boosting pub profits along the way, the wet weather is likely to impact footfall on our high streets and productivity on our construction sites."

"Consumer confidence has been given a shot in the arm by falling inflation but those few extra pennies in our pay packets don’t stretch that far and there’s every indication that come the winter energy bills are going to take a bigger bite out of our household budgets."

Some analysts believe that May's robust growth figures could dissuade the Bank of England (BoE) from cutting interest rates when it meets next month.

The base rate is still at a 16-year high of 5.25%, although inflation is now in line with the BoE's 2% target.

Despite uncertainty over borrowing costs, Thursday's figures will be welcomed by the new Labour government in the UK.

The Chancellor Rachel Reeves is hoping that by prioritising growth, she will be able to sustainably finance public service spending.

In reaction to the ONS' announcement, the pound rose against the dollar on Thursday morning to $1.287 (as of 9h45 GMT+1).

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