The UK economy returned to modest growth in May, with GDP rising 0.1% month-on-month after a -0.1% contraction in April, slightly exceeding expectations for a flat reading. The data suggest the economy regained some momentum after a soft start to the second quarter, although the recovery remains uneven beneath the headline. Growth was driven almost entirely by the services sector, while both production and construction continued to weigh on overall activity.
Services output rose 0.3% mom in May, reversing April’s modest decline, with seven of the fourteen subsectors expanding during the month. The sector continues to provide the principal source of support for the economy, highlighting the resilience of consumer-facing and business services despite a backdrop of elevated interest rates and global uncertainty.
In contrast, production fell -0.5% mom, led by a sharp -4.6% decline in mining and quarrying alongside weakness in utilities and waste management. Manufacturing provided a rare bright spot, edging up 0.1% and preventing an even steeper decline in industrial output. Construction activity also weakened, falling -0.8% mom after a revised 0.1% decline in April, suggesting higher borrowing costs continue to restrain investment and building activity.
The broader trend nevertheless remains constructive. Over the three months to May, GDP expanded 0.7%, following growth of 0.8% in the previous three-month period. Services remained the primary growth engine with a 0.7% increase, while construction posted a solid 1.6% rise despite recent monthly weakness. Production also managed a modest 0.1% gain over the period.
Taken together, the figures point to an economy that continues to grow, albeit at a moderate pace and with an increasingly uneven sectoral mix. The resilience of services is helping offset ongoing weakness in more cyclical industries, suggesting the UK expansion remains intact but far from broad-based.
Economic Data
| Indicator | Actual | Expected | Previous |
|---|---|---|---|
| GDP (May MoM) | 0.1% | 0.0% | -0.1% |
| Services Output (MoM) | 0.3% | — | -0.1% |
| Production Output (MoM) | -0.5% | — | 0.2% |
| Manufacturing Output (MoM) | 0.1% | — | 0.0% |
| Construction Output (MoM) | -0.8% | — | -0.1% |
| GDP (3M/3M) | 0.7% | — | 0.8% |
| Services Output (3M/3M) | 0.7% | — | 0.9% |
| Production Output (3M/3M) | 0.1% | — | 0.1% |
| Construction Output (3M/3M) | 1.6% | — | 1.3% |
Key Takeaways
- UK GDP returned to growth in May, rising 0.1% mom after April’s 0.1% contraction, modestly beating expectations.
- The recovery was entirely service-led, with services output rising 0.3%, while production and construction both contracted.
- Production fell -0.5%, largely due to sharp declines in mining & quarrying (-4.6%) and utilities. Manufacturing edged up just 0.1%.
- Construction declined -0.8%, marking a second consecutive monthly fall and pointing to continued weakness in investment-related activity.
- Despite softer monthly readings in production and construction, the broader trend remains positive, with GDP expanding 0.7% over the three months to May.
- The data suggest the UK economy continues to grow at a modest pace, but the expansion remains narrowly driven by services rather than broad-based across sectors.
