GDP has increased by 0.4% in May after showing no growth in the previous month, the Office for National Statistics (ONS) has reported.

In the three months to May, GDP is estimated to have increased by 0.9% compared to the three months to February, which is the strongest quarterly growth since January 2022.

The ONS said that the services output was the main contributor to this rise in GDP, increasing by 1.1% in the three months to May, with professional, scientific and technical activities being the largest positive contributor, growing by 2.5%.

Month-on-month, services output is estimated to have grown by 0.3% in May, following the same rise in April, with eight out of 14 sub-sectors showing growth in the period.

Senior equity analyst at Hargreaves Lansdown, Matt Britzman, said: "UK markets have opened higher after GDP figures came in better than expected and Wall Street continued on its record run. GDP grew by 0.4% in May, compared to a consensus of 0.2%. The consumer-led recovery is taking shape, buoyed by the return of real income growth and improved housing activity. The double-edged sword for markets is that if GDP runs too hot, it’ll likely make the Bank of England’s rate-cutting decision a little tougher."

Production output grew by 0.2% in May, following a fall of 0.9% in April. However, across the quarter, there was no growth in the sector.

Construction output also increased by 1.9% month-on-month, following a drop of 1.1% in April. In the three months to May, construction output fell by 0.7%.

Investment strategist at Quilter Investments, Lindsay James, added: "With wage growth outpacing inflation and the prospect of interest rate cuts ahead, this could bring somewhat improved growth as we move further into the summer months. However, regardless of the new Labour Government’s agenda, the second half of 2024 is unlikely to see a significant change of pace compared to the first, and we may not see any noticeable difference until next year.

"Labour’s first fiscal statement, which is expected no earlier than mid-September, should make both taxation and spending plans clearer. This will allow businesses to better plan ahead and could in turn reinvigorate their want to invest. However, this would take time to feed through, and until there is a better understanding of what is to come, we are unlikely to see any meaningful acceleration in GDP growth."

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