The UK economy expanded for the second straight month in February suggesting that it is set to move out of a technical recession, thanks to the rebound in manufacturing output.
Real gross domestic product edged up 0.1 percent on a monthly basis in February, the Office for National Statistics said Friday. The growth for January was revised higher to 0.3 percent from 0.2 percent.
Industrial production was the largest contributor to the growth in February, which climbed 1.1 percent, reversing a revised 0.3 percent fall. Within overall output, manufacturing rebounded 1.2 percent after a 0.2 percent fall.
Services output growth softened to 0.1 percent from an upwardly revised 0.3 percent.
Partially offsetting these gains, construction output fell 1.9 percent, in contrast to an unrevised 1.1 percent growth in January.
ING economist James Smith said growth rates are likely to remain positive throughout 2024 and potentially gain momentum into the second half of this year.
However, no fireworks should be expected and the growth outlook is unlikely to have much bearing on the timing of the Bank of England rate cut, the economist added.
The 0.1 percent growth in February and the upward revision to the January figure confirms the recession ended in the fourth quarter, Capital Economics’ economist Paul Dales said.
However, the recovery won’t be strong enough to prevent inflation from falling further. As a result, inflation in the UK will fall below US inflation in April and the BoE may first cut interest rates in June and reduce them to 3.00 percent next year, Dales added.
On a yearly basis, GDP posted a decline of 0.2 percent in February, which was better than economists’ forecast of 0.4 percent contraction.
In three months to February, real GDP gained 0.2 percent from three months to November.
Another report from the ONS showed that the visible trade deficit widened moderately to GBP 14.2 billion in February from GBP 14.1 billion in January. At the same time, the surplus on services trade remained broadly unchanged at GBP 11.9 billion.
As a result, the total trade balance showed a shortfall of GBP 2.3 billion compared to a deficit of GBP 2.2 billion in January.
by Renju Jaya
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