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High GDP on a monthly basis in May

2018-07-10 02:44 pm | Resource: NEWS | No Views : 138

British economic growth gained momentum in May, after it stopped earlier this year, adding fuel to expectations that the Bank of England will raise interest rates in August.

Gross domestic product rose 0.3 percent on a monthly basis in May after a 0.2 percent increase in April and a steady reading in March, the first monthly estimate from the National Bureau of Statistics on Tuesday.

Services have largely led to monthly growth as retailers enjoyed a combination of warm weather and a royal wedding. In May, services grew by 0.3 percent.

The most reliable comparison for 3 months, GDP rose by 0.2 percent in the quarter to May after steady results in the three months to April.

"Our first new GDP estimate shows a mixed picture of the UK economy with modest growth driven by the services sector, offset in part by the decline in construction and industrial production," said Rob Kent Smith, head of national accounts at the National Bureau of Statistics. .

"Retail performance, computer programming and legal services all performed strongly in the three months to May, while contracting both home construction and manufacturing."

Construction has seen a return to growth after two weeks of weakness, said Andrew Wesart, an economist at Capital Economics. The economy may outperform the BoE's forecast, given the strong purchasing managers in June.

"Assuming that political developments do not cause economic expectations to deteriorate, we still expect the MPC to raise interest rates next month," he said.

Separate figures from the National Bureau of Statistics showed on Tuesday that industrial production fell for the third consecutive month in May, defying economists' expectations for an increase.

Industrial production fell 0.4 percent on a month-on-month basis in May, below the 1.0 percent decline in April. Economists, on the other hand, forecast a 0.5 percent increase.

Industrial production rose 0.4 percent in May, after falling for three months. However, growth was lower than expected 0.8 percent.

Another report from the statistical office showed that construction production rebounded strongly by 2.9 per cent per month in May against an expected 0.3 per cent rise.

Compared to last year, construction production rose 1.6 percent in May, in contrast to a 1.2 percent fall in April.

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