UK Q1 GDP Growth Slows to Weakest in 5 Years

The British economy grew by 0.1 percent on quarter in the three months to March 2018, easing from a 0.4 percent expansion in the previous period and missing market expectations of 0.3 percent, a preliminary estimate showed. It was the weakest growth rate since a 0.1 percent contraction recorded in the fourth quarter of 2012.

The services aggregate was the main driver of the growth in GDP, growing by 0.3 percent and contributing 0.21 percentage points. Production continued to grow, with a rise of 0.7 percent in the first quarter, contributing 0.10 percentage points to GDP. This was driven mainly by mining and quarrying, and electricity and gas. However, construction contracted by 3.3 percent, contributing negative 0.21 percentage points to GDP. Although agriculture contracted by 1.4 percent, the contribution was only negative 0.01 percentage points due to its low industry weight.

Services expanded by 0.3 percent in the first quarter, easing from 0.4 percent in the previous period. The business services and finance sector continued to be the main driver of growth in services in the latest quarter (0.4 percent vs 0.6 percent in Q4 2017), mainly boosted by architectural and engineering activities. Transportation, storage and communication increased by 0.4 percent, after 1.1 percent growth in the previous period, as telecommunications rose the most. Government and other services grew by 0.1 percent, the same pace as in the fourth quarter, with the largest contributor to this sector being human health activities. In contrast, distribution, hotels and catering contracted by 0.1 percent, the same as in the previous three-month period: retail trade was the largest contributor to the negative growth, decreasing by 0.5 percent.

Within production (0.7 percent vs 0.4 percent in Q4), mining and quarrying (3.5 percent vs -4.9 percent), and electricity and gas (2.3 percent vs -0.4 percent) were the largest contributors to growth. Meanwhile, manufacturing growth slowed to 0.2 percent from 1.3 percent in Q4; and water supply, sewerage, waste management and remediation activities shrank for the fourth consecurive quarter (-0.3 percent vs -0.4 percent).

Construction output was estimated to have decreased by 3.3 percent, after a 0.1 percent fall in the previous period. It was the largest slump in construction activity since the second quarter of 2012. There is some evidence of an impact of the bad weather on construction output. However, output fell across all three months of the quarter, not just during the period of bad weather.

UK Q1 GDP Growth Slows to Weakest in 5 Years

ONS | Joana Ferreira |
4/27/2018 8:56:06 AM