UK economic growth slows

The Office for National Statistics’ (ONS) preliminary estimate for GDP in the first quarter of 2018 shows that the economy grew by just 0.1%, down from 0.4% in 2016 Q4 – its slowest growth since 2012 Q4.

Construction activity is estimated to have fallen 3.3% over the period, compared to growth of 0.7% for industrial production and 0.3% for the services sector. The preliminary estimate incorporates 45% of total data for the quarter and will be subject to revisions.

“Our initial estimate shows the UK economy growing at its slowest pace in more than five years, with weaker manufacturing growth, subdued consumer-facing industries and construction output falling significantly,” Rob Kent-Smith of the ONS said.

“While the snow had some impact on the economy, particularly in construction and some areas of retail, its overall effect was limited with the bad weather actually boosting energy supply and online sales.”

Rebecca Larkin, senior economist at the Construction Products Association, said: “This preliminary estimate gives the first full indication of how construction was affected by the liquidation of Carillion in January and the adverse weather at the end of February and beginning of March. The quarterly decline of 3.3% was the worst since 2012 Q2 and implies a £1.3 billion loss of output in the opening months of 2018.

“Some degree of catch-up is expected throughout spring and summer, but on the CPA’s forecasts, amid continued economic uncertainty and weakness in commercial construction, output for the year is still expected to be flat at best.”

The unemployment rate was at 4.2% in the three months to February 2018, a record low since 1975. The employment rate was at a record high in December 2017 to February 2018, at 75.4%. There has been an increase since the economic downturn in the responsiveness of employment to economic growth. Industries with high employment intensity of growth help contribute to the growing employment and low unemployment.