UK GDP saw a contraction of -0.3% mom in March, significantly underperforming against expectations of being flat. The contraction was primarily driven by the services sector, which slipped by -0.5% in the month, following an unrevised dip of 0.1% in February.
However, not all areas of the economy were in decline. Production output experienced its strongest monthly growth since May 2021, with a 0.7% increase in March, rebounding from a 0.1% fall in February. Similarly, construction sector showed modest growth of 0.2% in March, albeit much slower than February’s robust 2.6% rise.
On a quarterly basis, GDP growth for Q1 met expectations at 0.1% qoq. In output terms, services sector eked out 0.1% growth over the quarter, fueled by advancements in information and communication, and administrative and support service activities. Construction sector also saw growth at 0.7%, while the production sector managed a marginal 0.1% increase, with a slightly better 0.5% growth in manufacturing.
Year-on-year, the implied GDP deflator for Q1 2023 rose by 6.3%, indicating a slowdown from the 7.3% seen in Q4 2022. This suggests a softening of inflationary pressures within the UK economy over this period.
