Growth spurt as stockpiling boosts manufacturers
ECONOMIC growth picked up sharply in the first three months of the year as manufacturing surged at its strongest pace in more than 30 years.
GDP rose by 0.5pc, rebounding from 0.2pc at the end of 2018. Compared with a year ago the economy is now 1.8pc bigger, its strongest rate of growth since late 2017, the Office for National Statistics (ONS) said.
The 2.2pc boom in manufacturing may be caused in part by stockpiling as firms bought up supplies before March 29, the initial Brexit deadline, on fears of trade disruption. Drinks and pharmaceuticals were particularly strong.
“The economy remains robust, with growth of 0.5pc in the first quarter benefiting every major sector,” said Philip Hammond, the Chancellor. “The economy has grown for nine consecutive years, debt is falling, employment is at a record high and wages are rising at their fastest pace in over a decade.” The Bank of England believes growth would have been around 0.4pc without stockpiling, so the second quarter may be weaker – GDP slid by 0.1pc in March.
There are other signs of Brexit fears moderating and of domestic strength. Investment grew by 0.5pc in the quarter as firms spent more on IT and other equipment, unlike 2018 which saw a fall each quarter. The ONS noted it was an early estimate, prone to revision.
Retail sales grew by 1.6pc as households shrugged off the political turmoil to keep spending. Construction also recovered from its contraction in late 2018, growing 1pc in the first quarter.
Higher government spending on health, public services and economic affairs boosted growth with state sector consumption up 1.4pc, a touch up from 1.3pc in the previous quarter.
The main weakness was in services, which make up around 80pc of the UK economy – growth slowed to 0.3pc, from 0.4pc in the previous quarter, its weakest performance in a year.