UK economic growth rises after biggest manufacturing push since 1980s

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UK economic growth accelerated in the first quarter of this year, driven by the highest quarterly pick-up in manufacturing since the 1980s as the original Brexit deadline loomed.

Gross domestic product (GDP) growth rose to 0.5% between January and March, according to the Office for National Statistics (ONS).

This compares to 0.2% growth in the previous quarter, when car manufacturing declined at its steepest rate in just under a decade.

In comparison with the same quarter a year ago, GDP was up 1.8%.

Production output increased by 1.4% in the quarter.

(PA Graphics)
(PA Graphics)

The ONS noted that many manufacturers had delivered orders early, indicating a rush of activity as companies cleared out the order books in advance of the March 29 Brexit deadline.

Pharmaceuticals in particular showed high activity, growing 9.4%.

Inventories were also a contributing factor, as some businesses stockpiled parts due to concerns over supply disruption if the UK crashed out of the EU without a deal.

The rate at which inventories increased was the highest for any G7 country.

Meanwhile services output slowed to 0.3%, despite strengthening retail sales.

The deceleration echoes the trend noted by the Markit UK Services Purchasing Manager’s Index (PMI) for March, when companies opted to delay spending due to the uncertainty over Brexit.

But there was a sharp pick-up in retail sales, up 1.6%.

Construction output increased by 1%, driven by a 2.9% rise in repair and GDPmaintenance work.

Output of the agriculture, forestry and fishing sector fell by 1.8%, providing the only negative contribution to growth.

Following a full year of decline in 2018, business investment recovered to post a 0.5% increase in the first quarter of 2019 as firms put more money into IT equipment and other machinery.

But the ONS warned that the figures could be revised, with some external evidence suggesting confidence remained weak during the period.

The Government’s consumption increased by 1.4%, up slightly on 1.3% in the final quarter of last year.

The ONS data dump also showed that the trade deficit widened to 3.4% of nominal GDP in the quarter.

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