UK economy boosted by temporary factors in first quarter of 2019

14-May-2019

 

Figure 1: UK GDP growth (3 months on previous 3 months, per cent)  


Source: NIESR, ONS

Note: the solid bars show the 3m/3m growth rate for complete calendar quarters and the shaded areas show rolling 3m/3m growth rate for the intervening months. There may be inconsistencies in the growth rate arising from rounding.

Main points

  • Latest economic data shows that the pace of activity picked-up in the first quarter of 2019, with quarterly growth rising to 0.5% after growth of 0.2% in the final quarter of last year.

  • The improvement in the growth rate reflects temporary factors, such as the influence of additional stockbuilding on manufacturing output. Within manufacturing, the output of the pharmaceuticals industry increased by 9.4% on the quarter, with at least some of the increase likely to be associated with stockbuilding abroad ahead of the original Brexit departure date. There was also a strong contribution in the first quarter from mining and quarrying output, which grew by 2.0% on the quarter, but is known to be volatile.

  • The economy is on track to grow at the slightly slower pace of 0.3% in the second quarter as some of these temporary factors fade.

Garry Young, head of Macroeconomic Modelling and Forecasting, said “The latest ONS data suggest that the economy is growing at the relatively sedate underlying pace of 1½% per year, with ups and downs around that due to erratic factors, such as the weather and, in the first quarter of 2019, stockpiling ahead of the original Brexit date.  It is unlikely that the pace of growth will pick up significantly as long as Brexit-related uncertainty is hampering forward planning in business and government”.