UK GDP stagnated in April, in blow to claims economy has turned corner

Selasa, 11 Juni 2024

UK GDP stagnated in April, in blow to claims economy has turned corner – business live - The Guardian

Good morning, and welcome to our rolling coverage of business, the financial markets, and the world economy.

Rishi Sunak’s claim that “the economy has turned a corner” is about to be tested.

New gross domestic product data, due at 7am, will show how the UK economy fared in April.

It’s the last official healthcheck on UK economic growth before the election, a day after we learned that unemployment rose in the February-April quarter.

The City, on balance, expect no growth during the month, in which bad weather hit retail sales spending.

A Reuters poll of economists found that the consensus forecast is for 0% change in GDP in April. But there’s a range of predictions – from an optimistic +0.2% growth to a gloomy -0.3%.

Even the top of those forecasts would be a slowdown compared with March, when the UK grew by 0.4%, helping the economy exit recession.

Deutsche Bank’s chief UK economist, Sanjay Raja, is among those predicting stagnation in April, saying:

After a thumping end to Q1-24, we expect the UK economy to start out flat as we enter Q2-24. UK GDP, we think, will likely stall in April, weighed down by falls in both the services and manufacturing sectors.

Risks are skewed to a slightly stronger print based on our nowcasts.

Jefferies’ economists Modupe Adegbembo and Mohit Kumar expect growth of 0.2% in April, telling clients:

Growth momentum remains robust in the UK, but monthly numbers tend to be volatile and impacted by factors such as weather. In April, the UK saw one and a half times more rain than usual which is likely to have dampened activity in construction and services.

The agenda

7am BST: UK GDP report for April
7am BST: UK trade report for April
7am BST: German CPI inflation report for May
1.30pm BST: US CPI inflation report for May
7pm BST: US Federal Reserve sets US interest rates

Filters BETA

Britain’s economy was dragged down by the factory sector, and by the building sector, in April.

The ONS says:

Services output grew by 0.2% in April 2024, its fourth consecutive monthly growth, and also grew by 0.9% in the three months to April 2024.
Production output fell by 0.9% in April 2024 following growth of 0.2% in March 2024, but grew by 0.7% in the three months to April 2024.
Construction output fell by 1.4% in April 2024, its third consecutive monthly fall, and fell by 2.2% in the three months to April 2024.

Newsflash: the UK economy stagnated in April, a blow to Rishi Sunak’s claim that it has turned a corner.

UK GDP was unchanged month-on-month in April, new data from the Office for National Statistics shows, following growth of 0.4% in March.

That is in line with City expectations, and shows the economy struggled to maintain momentun in April after leaving recession in the first quarter of 2024.

Today’s GDP report will paint a picture of the UK domestic economy, says Thomas Watts, investment analyst at abrdn Portfolio Solutions, and one which the electorate will pay attention to:

GDP is often considered the broadest measurement of the health of an economy, gauging the change in the total value of all goods and services produced by a country. With the UK having just exited a shallow recession with economic growth having re-entered positive territory, many will be hoping that the trend can continue.

The data also takes on added significance as it acts as one of the final pieces of big economic data before the upcoming general election and will be sure to influence voter thinking when heading to the polls.

The Euro 2024 men’s football tournament could give the UK economy a lift this summer.

A survey from the British Retail Consortium (BRC) has found that 6% of shoppers expect to buy a new TV or electronic device to watch the tournament, which begins on Friday, and in which both England and Scotland are playing.

Some 13% of people plan to spend more on groceries, beer, wine and spirits and takeaways to enjoy while watching the Euros; retailers could also benefit from merchandise sales.

Kris Hamer, director of insight at the BRC, says:

After sluggish spring sales, shoppers are expected to kick off their summer spending at the Euros. Here’s hoping England and Scotland can make it all the way to the final.”

🤞🤞

On an annual basis, the UK economy is forecast to have grown by 0.6% in the year to April, down from 0.7% in the year to March.

That would be a sluggish performance, reflecting the drop in GDP recorded in the second half of 2023.