Britain's economy returned to growth in May after shrinking in April, according to new data released today. The Office for National Statistics reported a 0.4% expansion for the month, driven by increases across services, production, and construction sectors.
The rebound follows April's 0.1% contraction, suggesting the economy is stabilizing after a softer start to 2024. Services led the recovery, with retail and hospitality showing particular strength as warmer weather boosted consumer activity. Manufacturing output also improved, while construction activity expanded ahead of summer projects.
The month-on-month figure matters less than the broader quarterly trend. On a three-month rolling basis, the UK economy grew 0.6%, keeping pace with recent sluggish expansion. For context, this trails growth rates seen in other G7 economies and falls short of the Bank of England's forecasts from earlier in the year.
Bank of England officials have signaled growing confidence in inflation's decline, opening the door to interest rate cuts in coming months. A sustained recovery would strengthen that case. Conversely, persistent weakness would force policymakers to hold rates higher for longer despite cooling price pressures.
The data arrives amid broader economic uncertainty. Wage growth remains above target, supply-chain disruptions persist, and geopolitical tensions threaten energy prices. Consumer confidence has ticked up recently, but household spending power remains constrained by elevated mortgage costs and energy bills.
Chancellor Jeremy Hunt will view the May figures as a modest win ahead of the general election, due by January 2025. Labour opposition figures have criticized the government's economic management, pointing to years of slow growth. The party campaigned on a growth agenda, though concrete policy details remain sparse.
Economists expect quarterly GDP figures due next week will show stronger performance across the April-June period than April's standalone weakness suggested. A decisive rebound would ease recession fears that gripped markets earlier in the year. Without sustained momentum, growth will remain the defining challenge for whichever party takes office.