The economy was weaker than expected in mid-quarter, although only after an upward revision at the start of the year. Strike action was partly responsible for zero monthly GDP growth in February which followed a 0.4 percent gain in January. This trimmed the quarterly change from 0.2 percent to 0.1 percent, matching its weakest outturn since the fourth quarter of 2022. However, base effects lifted annual growth to 0.5 percent, up from 0.4 percent previously.

The flat monthly headline reading reflected a 0.1 percent contraction in services and a 0.2 percent decline in overall goods production, offset by gains in construction (2.4 percent) and mining and quarrying (3.0 percent). Within services, the main area of weakness was education and public administration and defence alongside compulsory social security. Output in consumer-facing industries expanded 0.4 percent, building on the 0.3 percent increase recorded in January.

The February data put GDP 0.3 percent above its pre-Covid level in February 2020. They also leave average total output in the first two months of the quarter 0.1 percent above its mean level in the fourth quarter of last year. Absent any revisions, the economy will need to contract by more than a monthly 0.3 percent for first quarter growth to turn negative. As such, today's update further reduces the likelihood of the UK sliding into recession in the first half of the year. The UK's ECDI now stands at minus 4 and the ECDI-P at minus 13, both values indicating that overall economic activity is also falling marginally short of market expectations.

GDP in the month of February is expected to rise a further 0.2 percent versus 0.3 percent growth in January which was stronger than expected.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. The monthly report is based on output data only as the income and expenditure series are not available.

GDP covers all aspects of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market investors like to see healthy economic growth because robust business activity translates to higher corporate profits. GDP contains a treasure-trove of information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. However, the monthly report is quite limited and only provides data on the main output sectors. More detailed information is available in the quarterly reports.