1 of 2 | Chancellor of the Exchequer Jeremy Hunt welcomed official estimates out Wednesday showing GDP up by 0.3% as proof the government's plan to grow the economy was working. File photo by Hugo Philpott/UPI |
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June 14 (UPI) -- Strong services sector growth helped Britain's economy spring back into the black in April after shrinking the previous month, but the economic expansion was limited by sharp drops in production output and construction, estimates out Wednesday from the country's main statistic agency show.
The economy bucked a 0.3% contraction in March to post GDP growth of 0.2%, mainly due to a 0.3% growth in services, with consumer-facing services performing particularly well with 1% growth compared with a fall of 0.8% the previous month, according to Office for National Statistics estimates.
Retail, auto sales and repair, ICT and hospitality were the standout sub-sectors within services but their contributions were offset, in part, by falls in science and technology, real estate and health and social services, with the sector still proving a drag on growth in the longer term.
Production output went into reverse going from 0.7% growth in March to a 0.3% decline in April while construction growth posted a 0.6% fall after the sector expanded by 0.2% in March.
Zooming out to the bigger picture, however, shows the economy remains weak with growth for the first quarter of the year virtually flat at just 0.1% and the economy only 0.3% bigger than it was pre-pandemic in February 2020.
"GDP bounced back after a weak March. Bars and pubs had a comparatively strong April, while car sales rebounded and education partially recovered from the effect of the previous month's strikes," ONS Economics Director Darren Morgan said in a Twitter post.
"These were partially offset by falls in health, which was affected by the Junior Doctors' strikes, along with falls in computer manufacturing and the often erratic pharmaceuticals industry. House builders and estate agents also had a poor month.
"Over the last three months as a whole the economy grew a little, driven largely by the construction industries,'" said Morgan. "The services sector dragged growth down, partly due to the impact of public sector strikes."
The ONS' comments came as tens of thousands of junior doctors in England began a third 72-hour strike Wednesday over pay and conditions. Doctors in Scotland are set to take similar action in July after voting Tuesday to reject an offer of a 14.5% rise.
Chancellor Jeremy Hunt welcomed the return to growth and said Britain was on track to outperform its neighbors.
"We are growing the economy, with the International Monetary Fund saying that from 2025 we will grow faster than Germany, France and Italy," Hunt said.
"But high growth needs low inflation, so we must stick relentlessly to our plan to halve the rate this year to protect family budgets."
However, the Labor oppositions shadow chancellor, Rachel Reeves, attacked the government's management of the economy.
"The facts remain that families are feeling worse off, facing a soaring Tory mortgage penalty and we're lagging behind on the global stage," Reeves said.
"Despite our country's huge potential and promise, today is another day in the dismal low-growth record book of this Conservative Government."
