GDP jumps by 0.4% in March

The UK GDP increased by 0.4% in March after jumping by 0.2% in February, the Office for National Statistics (ONS) has reported.

Over the first quarter of 2024, GDP has grown by 0.6%, compared to the final three months of 2023.

This follows drops in quarterly GDP of 0.1% and 0.3% in Q3 and Q4 of 2023, respectively.

The ONS found that services output grew by 0.5% in March, after a growth of 0.3% in February. It also increased by 0.7% in the three months to the end of March and was the largest contributor to the growth in GDP in both the month and the quarter.

Across the quarter, transportation and storage was the largest positive contributor to the rise in services output, growing by 3.7%, while professional, scientific and technical activities, and admin and support service activities increased by 1.3% and 1.7%.

In March, 10 of the 14 services sub-sectors recorded growth month-on-month.

Production output increased slightly by 0.2% in March, after a 1% rise in February, while construction output dropped by 0.4% in March, after a fall of 2% a month previously.

Personal finance analyst at Bestinvest, Alice Haine, said: "While better-than-expected growth of 0.4% in March was positive news for the economy, the 0.6% expansion in the first quarter was even better as it confirmed that the UK had bounced back from the technical recession it fell into in the second half of last year when high interest rates, high inflation and persistent industrial action dented output.

“With the short and shallow recession now behind us, households can breathe a sigh of relief and hopefully look forward to better times ahead. While the big sticking point for consumers has been the Bank of England’s cautious stance towards interest rate cuts, the rate-setting Monetary Policy Committee shifted its stance this week, raising the likelihood of a summer rate cut, perhaps as soon as next month, though many households would prefer that to be a certainty than a possibility to ease the financial pressures they are facing.

Head of financial analysis at AJ Bell, Danni Hewson, added: "Services and manufacturing have helped offset ongoing challenges being faced by the construction sector. Not only has it been dampened by real life downpours, but the Bank of England’s continued rate pause has softened demand from would-be homeowners whilst changing working habits have pushed businesses to rethink their office requirements.

"Falling inflation and rising wages have given households a bit more in the tank and they’ve upped their spend, something that will need to continue if the trajectory is to be maintained. We’ve not yet seen the impact of the cut to National Insurance or the increase in the national minimum wage on consumer spending patterns and there have been plenty of businesses making it crystal clear that increased wage costs would have to be passed on.

"Those green shoots we’ve heard so much about since the start of the year have sprouted nicely, but it will only take one spring storm to damage the burgeoning flowers."

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