UK GDP grows by 0.1% in the first quarter of 2022, as expected

The UK's GDP grew by 0.1% in the first quarter of 2023, maintaining the same pace observed in the fourth quarter of 2022 (0.1%), according to the first official estimate released on Friday (12) by the Office for National Statistics. , the country's national statistics office. For the first quarter of 2022, the British economy is estimated to grow at 0.2%.

The data came within the expectations captured by the Refinitiv consensus, which was an increase of 0.1% compared to the last quarter of last year and 0.2% compared to the first three months of 2022.

The Office for National Statistics also brought worrying information about the monthly performance of the UK economy. GDP in March would have fallen by 0.3%, after a 0.5% increase in January (figure revised upward) and stability (0.0%) in February.

The ONS also conducted a comparison that placed the UK economy's performance at the lowest point among G7 countries in terms of post-pandemic recovery.

When comparing GDP data from the first quarter compared to the last period before the health crisis (Q4 2019), domestic GDP is still lower by -0.5%. The United States (+5.3%) leads this ranking, followed by Italy (+2.4%), France (+1.3%) and Germany (-0.1%). Canada and Japan have not yet released their statistics for the first quarter.

Services

The services sector showed growth of 0.1% in the first quarter, at the same speed as in the fourth quarter of 2022. The performance of the services subsectors was mixed in the first quarter, with 7 subsectors out of 14 subsectors offsetting growth. Due to declines in the other seven. Overall, consumer-facing services hurt the bottom line, falling 0.4%, while all other services rose 0.2%.

The largest positive contribution to growth came from the information and communications subsector, which grew by 1.2%, with increases in computer programming, consulting and related activities, and communications. The second largest positive contribution to growth came from administrative activities and support services, which grew by 1.3%.

However, there was a decrease in education (0.7%), health (0.5%), public administration and defense (0.7%) and transportation and warehousing (1.0%).

production

Production also increased by 0.1% in the first quarter of 2023, after showing no growth in the previous quarter and recording five consecutive declines before that.

The increase in production in the fourth quarter was mainly driven by a 0.5% increase in manufacturing. There were increases in 8 of the 13 sub-sectors, with the largest positive contribution coming from the manufacture of base metals, metal products, computer products, and electronic and optical products. These declines were partially offset by reductions in manufacturing of essential pharmaceutical products and pharmaceutical formulations.

building

Construction production was the highlight, rising 0.7% in the first quarter of 2023, the sixth consecutive quarter of positive growth. Growth in Q1 2023 was driven by the repair and maintenance sector, which grew by 4.9%, with all three sub-sectors growing in the quarter. This growth was partially offset by a 1.9% decline in new construction.

Private consumption

In private consumption, there was no growth in real household spending in the first quarter of 2023, after growth of 0.2% in the previous quarter, as real household income remains under pressure due to higher inflation.

There were increases in spending on entertainment, culture, communications, housing and clothing in the last quarter. These declines were offset by transportation, alcohol, and tobacco.

In current prices, household spending rose by 1.2% during the quarter, as recent inflationary pressures increased its nominal value.

Government consumption

Real government consumption spending fell by 2.5% in the first quarter of 2023. This decline reflects declines in nominal spending on public administration and defense in the quarter. There was also a decline in education and health volumes, with volumes weakening due to the wave of strikes that occurred during this period.

Investments

There was a 1.3% increase in gross fixed capital formation (GFCF) in the first quarter of 2023. This reflects increases in business and government investment in the quarter, partially offset by lower residential investment.

Business investment rose 0.7% in the first quarter of 2023, but remains 1.4% below pre-pandemic levels.