UK economy returns to growth in January

13th Mar 2024 07:12

(Sharecast News) - The UK economy returned to growth in the first month of 2024, according to figures released on Wednesday by the Office for National Statistics.

Gross domestic product rose 0.2% on the month in January, in line with expectations, following a 0.1% decline in December.

In the final three months of 2023, GDP fell 0.3%, having contracted by 0.1% in the previous three months, dipping the economy into a technical recession.

Services output grew by 0.2% in January and was the largest contributor to the rise in GDP, the ONS said. Production output declined by 0.2% in January, while construction output was up 1.1%.

The data showed that in the three months to January, GDP fell by 0.1% compared with the three months to October 2023. Services output showed no growth during the period, while production output fell by 0.2% and construction output also fell, by 0.9%.

ONS statistician Liz McKeown said: "The economy picked up in January with strong growth in retail and wholesaling. Construction also performed well with housebuilders having a good month, having been subdued for much of the last year.

"These were partially offset by falls in TV and film production, lawyers and the often-erratic pharmaceutical industry.

"Over the last three months as a whole, the economy contracted slightly."

James Smith, developed markets economist at ING, said: "It's worth emphasising that these GDP figures have been all over the place over the past few months, not least in manufacturing where a large drop in October's production numbers gave way to a swift recovery in November and December. Manufacturing was flat in the first month of this year.

"We therefore shouldn't overstate one month's worth of GDP figures, but we think it is consistent with the gradual recovery in activity that we expect over the coming months. We think the decline in overall fourth quarter GDP, which marked the second consecutive quarter of negative growth and therefore a technical recession, is unlikely to be repeated in the first quarter of 2024."