| Consensus | Actual | Previous | |
|---|---|---|---|
| Month over Month | -0.4% | -0.1% | 0.2% |
| 3-Months over 3-Months | -0.1% | 0.0% | 0.1% |
Highlights
The economy contracted in May but was still stronger than expected. Following an unrevised 0.2 percent monthly rise in April, GDP dipped 0.1 percent, some 0.3 percentage points less than the market consensus albeit its second decline in the last three months. The drop reduced quarterly growth to zero from 0.1 percent in the three months to April and the annual change from 0.5 percent to minus 0.4 percent. Total output was just 0.2 percent above its pre-Covid level in February 2020.
Weakness was broad-based but led by the goods producing sector where output was down a monthly 0.6 percent. Within this, manufacturing declined 0.2 percent. Elsewhere, construction also decreased 0.2 percent while services were flat with output in consumer-facing services falling 0.2 percent following a 1.1 percent rise in April.
Today's data put average GDP in the first two months of the second quarter unchanged from its mean level in the first quarter. The additional bank holiday for the Coronation of King Charles III on 8 May probably had some impact although a likely hit to goods production needs to be weighed against a reported boost to the arts and entertainment and recreation sectors. Net the impact was probably only small. In sum, GDP has been essentially flat-lining since the start of the year which will be enough to support expectations for another BoE interest rate hike next month. At 18, both the UK's ECDI and ECDI-P show that overall economic activity is running slightly ahead of market expectations.
Weakness was broad-based but led by the goods producing sector where output was down a monthly 0.6 percent. Within this, manufacturing declined 0.2 percent. Elsewhere, construction also decreased 0.2 percent while services were flat with output in consumer-facing services falling 0.2 percent following a 1.1 percent rise in April.
Today's data put average GDP in the first two months of the second quarter unchanged from its mean level in the first quarter. The additional bank holiday for the Coronation of King Charles III on 8 May probably had some impact although a likely hit to goods production needs to be weighed against a reported boost to the arts and entertainment and recreation sectors. Net the impact was probably only small. In sum, GDP has been essentially flat-lining since the start of the year which will be enough to support expectations for another BoE interest rate hike next month. At 18, both the UK's ECDI and ECDI-P show that overall economic activity is running slightly ahead of market expectations.
Market Consensus Before Announcement
GDP in the month of May is expected to fall 0.4 percent versus April expansion of 0.2 percent.
Definition
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.
Description
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.
