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The UK economy grew faster than expected in May helped by a strong performance from retailers and the construction industry.
The economy expanded by 0.4%, the Office for National Statistics (ONS) said, rebounding from zero growth in April when wet weather put off shoppers and slowed down building projects.
Construction expanded at the fastest rate in almost a year in May, with house building and infrastructure projects boosting the industry, the ONS said.
The question of how to increase growth in the UK’s economy was one of the key battlegrounds in the recent general election.
Liz McKeown, of the ONS, said that many retailers and wholesalers “had a good month, with both bouncing back from a weak April”.
The services sector, which dominates the UK economy and covers businesses such as hairdressers and hospitality, grew by 0.3% in May, while the construction sector jumped by 1.9%.
The new Labour government has announced a number of measures this week aimed at improving growth.
Chancellor Rachel Reeves has said housebuilding targets will be reintroduced, planning restrictions will be overhauled and there will be an end to the effective ban on onshore wind farms in England.
A new National Wealth Fund has also been announced to attract investment in infrastructure and green industry.
Economists warn against placing too much weight on shifts in economic activity over one month because they can be affected by factors such as the weather.
In the three months to May 2024, gross domestic product – which measures the value of goods and services produced in a country over time – grew by 0.9% compared with the previous three months.
That was the quickest pace for more than two years, the ONS said, helped by strong growth in the services sector.
Analysts said the stronger than expected growth could reduce the chances of the Bank of England cutting interest rates when it meets next month.
There had been hopes that rates would be cut from the 16-year high of 5.25% when the Bank meets on 1 August.
Interest rates were increased by the Bank in order to slow the pace of inflation – the rate at which prices rise. However, the latest inflation figures showed the rate had fallen back to the Bank’s target of 2%.
Despite this, two members of the Bank’s Monetary Policy Committee (MPC), which decides the level of interest rates, have said this week they remain worried that inflationary pressures are persisting.
Rob Wood, chief UK economist at Pantheon Macroeconomics, said: “The UK economy is well and truly putting last year’s minor recession behind it.
“Rate-setters look desperate to ease policy and said in the minutes of their June meeting that they were unconcerned about stronger-than-expected growth,” he added.
“Even so, this latest upside growth surprise supports our call that the MPC will wait until September to reduce Bank Rate.”
