NIESR Monthly GDP Tracker – UK economy slows as stockpiling boost fades
11 Jun 2019 12:30 PM
UK economy slows as stockpiling boost fades
- The UK economy is on course to contract by 0.2 per cent in the second quarter of 2019, a marked slowdown from the first quarter when growth was boosted by stockbuilding ahead of the original Brexit departure date (figure 1).
- According to new ONS statistics published this morning, the UK economy expanded by 0.3 per cent in the three months to April. This outturn was weaker than the 0.4 per cent growth rate that we forecast last month for the same period.
- The slowdown in the three-month growth rate was associated with a 0.4 per cent fall in GDP in April, driven by falls in the production and construction sectors. Within manufacturing, there was a 24 per cent fall in car manufacturing related to factory shutdowns planned for after the original Brexit departure date. Output in the service sector was flat in April.
- Recent surveys suggest that there has not been a material recovery in output in May. Economic contraction of 0.2 per cent in the second quarter is expected to be mainly driven by the production and construction sectors, with a small positive contribution from the service sector.
Garry Young, Head of Macroeconomic Modelling and Forecasting, said “The UK economy is on course to contract by 0.2 per cent in the second quarter. The latest GDP data were weaker than expected, partly reflecting shifts in production around the original Brexit departure date, including a 24 per cent fall in car manufacturing. The underlying picture is also quite weak, with Brexit-related uncertainty at home and trade tensions abroad dragging on investment spending and economic growth”.
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