Economic growth remains lacklustre despite January fillip

Official figures showed the UK economy grew by 0.5% month on month in January thanks to a recovery across the services, construction and manufacturing sectors.

The monthly rebound reversed a hefty 0.4% drop in gross domestic product (GDP) seen in December.

But it was not enough to boost the overall performance in the three months to January, with growth edging 0.2% higher, according to the Office for National Statistics (ONS).

This was the same as the lacklustre growth seen in the final quarter of 2018.

Rob Kent-Smith, head of GDP at the ONS, said: “Across the latest three months, growth remained weak, with falls in manufacture of metal products, cars and construction repair work all dampening economic growth.

“These were offset by strong performances in wholesale, IT and health services.

“This sluggish growth came despite the economy bouncing back from a weak December.”

January’s rise in GDP was the biggest monthly increase since 2016 and came after the dominant services sector expanded by 0.3%, while construction surged 2.8% ahead and manufacturing enjoyed a 0.8% rise.

But the three-month data revealed manufacturing contacted by 0.7%, while construction activity fell 0.6%, which was only partially offset by a 0.5% increase in the services sector.

Britain’s growth has been slowing markedly since last summer as Brexit uncertainty and an easing in the wider global economy have taken their toll.

GDP growth more than halved in the final three months of the year after a buoyant 0.6% in the third quarter, which was helped by the summer heatwave and World Cup.

The Bank of England has predicted the lowest growth for a decade this year, slashing its forecast to just 1.2% in 2019 - which is also based on a smooth Brexit transition.

Howard Archer, chief economic adviser at the EY Item Club, said: “Despite January’s rebound in GDP, the overall impression remains that the economy is struggling in the first quarter of 2019 amid serious business and consumer caution resulting from heightened Brexit uncertainties, while weaker global growth is also impacting.”