UK GDP contracted by -0.1% mom in May, slightly better than expectation of -0.3% mom contraction. However, taking a wider view, GDP showed stagnation over the three months to May. The contraction in May was largely due to a decrease in production output by -0.6% mom, contributing significantly to the overall GDP decline. In contrast, services output remained stagnant while construction output dipped by -0.2% mom.
ONS shed light on the situation, attributing part of the contraction to additional bank holiday for King Charles III’s coronation on 8th May, which impacted a variety of manufacturing industries and construction businesses. On the brighter side, arts, entertainment, and recreation sector reported benefiting from the extra bank holiday.
The ONS report also highlighted that sectors such as health (specifically nursing), rail network, education, and civil service all saw industrial action take place in May 2023. Such strikes played a part in the month’s economic movements.
Also released, industrial production came in at -0.6% mom, -2.3% yoy, versus expectation of -0.4% mom, -2.3% yoy. Manufacturing production was at -0.2% mom, -1.2% yoy, versus expectation of -0.5% mom, -1.7% yoy. Goods trade deficit widened from GBP -14.6B to GBP -18.7B, larger than expectation of GBP -14.6B.
