Economic Review – July 2024
UK growth stronger than expected
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Figures released last month by the Office for National Statistics (ONS) showed the UK economy grew faster in May than had been predicted, while survey evidence points to a more recent post-election pick-up in business activity.
The latest gross domestic product (GDP) statistics revealed that economic output rose by 0.4% in May, twice the level that had been forecast in a Reuters poll of economists. May’s figure also represented a strong rebound from the zero-growth rate recorded in April, with a broad-based increase in output as the services, manufacturing and construction sectors all posted positive rates of growth.
ONS also noted that growth was relatively strong in the three months to May, with GDP rising by 0.9% in comparison
to the previous three-month period. This represents the UK economy’s fastest rate of growth for more than two years.
Evidence from a closely watched economic survey also suggests private sector output picked up last month following a lull in the run-up to July’s General Election. The preliminary headline growth indicator from the latest S&P Global/CIPS UK Purchasing Managers’ Index (PMI) stood at 52.7 in July, slightly ahead of analysts’ expectations and up from a six-month low of 52.3 in June. Manufacturing output
was particularly strong, with this sector expanding at its fastest rate in almost two and a half years.
Commenting on the findings, S&P Global Market Intelligence’s Chief Busi- ness Economist Chris Williamson said, “The flash PMI survey data for July signal an encouraging start to the second half of the year, with output, order books and employment all growing at faster rates
amid rebounding business confidence. The first post-election business survey paints
a welcoming picture for the new government, with companies operating across manufacturing and services having gained optimism about the future and reporting a renewed surge in demand.”
