- UK economy grew 0.1% in February thanks to an uptick in car and food production
- January’s growth figure revised up to 0.3%
- Rainfall dampens both retail and the construction sector
Danni Hewson, head of financial analysis at AJ Bell, comments on the latest UK GDP figures:
“Any growth is good news and certainly the UK seems to be trudging slowly out of last year’s short-lived recession. But at 0.1% in February and even with the upwardly revised 0.3% in January, UK growth looks pretty pitiful when you compare it to the economic picture on the other side of the pond.
“The impact of rain on GDP explains why we Brits are so pre-occupied with the weather. All those downpours dampened spirits and kept shoppers tucked up in their homes. Construction work slowed once again and the rain undoubtedly played a part here, but it wasn’t the whole story.
“Housebuilders have taken a good look at the ever-changing interest rate picture and decided to keep their powder dry. Slowing supply to a trickle keeps prices elevated and even though many costs have come down labour is still proving an expensive and sometimes illusive consideration.
“Only home repair and maintenance bucked the trend in February, perhaps due to would-be sellers sprucing up their properties ahead of the huge surge in homes put up for sale before the Easter break.
“Production was a bright spot in these figures and it’s great to see the UK making stuff and doing it well. Cars and food were two things high on the menu in February, both benefitting from falling prices and a slight uptick in consumer confidence as inflation continues to cool.
“But there are a few wildcards in play which could impact the economy over the coming months and are likely to factor into Bank of England rate decisions.
“Tensions in the middle east have pushed the price of oil over $90 a barrel and motorists are keenly aware of how quickly that pushes up prices at the pump. After the last year shoppers also understand the impact that can have on what goes into their basket, even if many have a few more pennies thanks to the cut in NI and the rise in the National Living Wage.
“The jigsaw investors in particular have been working to complete seems to have changed shape mid-play and everyone is running to keep up.”
