Last January, the economy recorded a surprise bounce back in what was regarded as a rare piece of good news for the City ahead of the scheduled Brexit date on the 29th of March.
Following a sharp decline last December, the Office for National Statistics said today that the gross domestic product of the country improved by 0.5 percent last January, the highest monthly gain in a period of more than two years. Strength in health services, wholesale trading, and IT offset the drops in the manufacturing of cars, metals, and construction output.
The rise comes after weak data across all of the sectors from surveys such as the Purchasing Managers’ Index and beat City forecasts of 0.2 percent.
The figures come as Theresa May, the Prime Minister of the United Kingdom, makes some preparation to put her Brexit deal to another parliamentary vote later tonight after securing last-minute changes late last Monday.
An economist at Pantheon, Samuel Tombs, stated: “This is a timely reminder that the PMIs aren’t a reliable indicator of the economy’s momentum when political uncertainty is elevated.”
He added: “Consumers aren’t letting the Brexit storm-clouds stop them from spending more when their real incomes are growing at a healthy rate.”
In the United Kingdom, production, services, construction, and manufacturing improved their output last January, after narrowing last December. However, the three-month GDP growth continued to be weak at 0.2 percent.
Rob Kent-Smith of ONS stated: “Growth remained weak with falls in manufacture of metal products, cars and construction repair work all dampening economic growth. These were offset by strong performances in wholesale, IT and health services.”
The head of research at wealth managers Kingswood, Rupert Thompson, stated: “The January GDP data provided some reassurance that the UK economy is not already heading headfirst into a Brexit black hole.”
The manufacturing output of the country was up for the first time in a period of seven months, from 0.8 percent from December. Some economists noted that the unexpected growth last January could have been linked to stockpiling by manufacturers in the United Kingdom who have been concerned over a disorderly Brexit that might cause delays and sluggish production.
The services sector accounts for over three-quarters of the economy. Unsurprisingly, it drove the improved in GDP growth. It increased by 0.5 percent in the three months to January. In contrast, on a three-month basis, the production and construction sectors dropped by 0.8 [ercent and 0.6 percent.
The trade deficit, which included services and goods, widened to £13.1 billion, the largest since mid-2017.