UK economy recovers in May, easing immediate recession fears


"The increase was driven by auto makers who began production again in May, having in many cases stopped in April in case Brexit disrupted their supply chain".

Economists believe this modest recovery may be enough to see off an overall contraction for the April to June period this year.

Allaying fears of a recession, the Office for National Statistics said UK GDP rose by 0.3% in May from a month earlier, when stoppages at auto plants across the country dragged the economy into contraction.

This was mainly due to the partial recovery in vehicle production, ' ONS statistician Rob Kent-Smith said.

Additionally, rolling three-month growth was 0.3%, the second consecutive slowing in growth since the 0.5% recorded in Q1.

Manufacturers across the country rushed to stockpile goods earlier this year in the run-up to the original Brexit deadline of 29 March - driving up economic growth - as they braced for disruption to their supply chains from a no-deal departure.

Overall output expanded 0.3% after contracting by 0.4% in April, stronger than all forecasts in a Reuters poll, which had pointed to a rise of 0.1%.

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In the construction sector, growth was flat for the three-month period, highlighting a marked slowdown from 1% growth in the period to April.

Rob Kent-Smith of the ONS pointed to the "partial recovery in vehicle production", which surged by 24%, as something that precipitated the return to growth in May.

There has been a "longer-term slowdown", however, in the services sector since the summer of 2018, he said.

"Nevertheless, storm clouds look to be gathering over the United Kingdom economy as consumers and business remain hamstrung by Brexit uncertainty".

Analysts warned the economy could still shrink in the second quarter as no-deal Brexit fears mount, with closely watched surveys of business activity suggesting negative growth of 0.1% in the three months to June.

UK GDP growth has slowed over the past few months amid weak global growth and heightened Brexit uncertainty. "The Q2 figure is due to be released on 9 August".