UK economy boosted by warm weather and royal wedding in May

The Office for National Statistics (ONS) said the the economy expanded 0.3% in May, while gross domestic product (GDP) rose 0.2% over the three months to May - both in line with economists’ expectations.

The ONS’ head of national accounts, Rob Kent-Smith, said it showed a “mixed picture of the UK economy with modest growth driven by the services sector, partly offset by falling construction and industrial output”.

“Retailing, computer programming and legal services all performed strongly in the three months to May, while housebuilding and manufacturing both contracted.

“Services, in particular, grew robustly in May with retailers enjoying a double boost from the warm weather and the royal wedding.

“Construction also saw a return to growth after a weak couple of months.”

The pound lost ground on the news to trade flat against the US dollar at 1.325.

Versus the euro, sterling was up 0.2% at 1.129.

The readings are the first in the new set of rolling estimates of GDP by the statistic agency, which previously provided only quarterly estimates of growth.

The ONS figures show that in the three months to May, services output increased by 0.4% compared with the three months ending February.

Month on month, services rose 0.3%, with wholesale, retail and motor trade making the largest contribution.

But construction output continued its recent decline on a three-monthly basis, falling by 1.7% in May, its third consecutive decrease.

This was driven by a fall in new work, which also fell for the third consecutive month, decreasing by 2.5%.

However, the ONS said that month on month, construction output showed signs of recovery in May, rising by 2.9% compared with April.

The sector was helped by private housing repair and maintenance work, which grew 7.3% in May following a weak start to the year.

PwC chief economist John Hawksworth said the recent rebound in services and construction output could result in a near doubling of growth in the second quarter, putting the Bank of England’s Monetary Policy Committee (MPC) on track to raise interest rates next month.