UK Q1 GDP Growth Weaker Than Expected

The British economy advanced 0.3 percent on quarter in the three months to March 2017, easing from a 0.7 percent growth in the previous period and below market expectations of a 0.4 percent expansion, a preliminary estimate showed. It was the slowest rate of growth since the first quarter of 2016, as services output expanded at a slower pace.
ONS | Joana Ferreira | 4/28/2017 8:55:04 AM
The services aggregate grew 0.3 percent in the first quarter after rising by 0.8 percent in the previous period; and contributed 0.23 percentage points to growth. Production, construction and agriculture contributed 0.04, 0.01 and 0.00 percentage points to the headline figure respectively.

Within the services aggregate, two of the four main sectors decreased in the first quarter of 2017. The main contributor to the slowdown in services was the distribution, hotels and restaurants sector, which decreased by 0.5 percent (2 percent in Q4 2016), contributing negative 0.07 percentage points to quarter-on-quarter GDP growth. Retail trade and accommodation services were the main contributors to the negative growth in this sector, due in part to prices increasing more than spending. These falls were partially offset by an increase in food and beverage service activities, which grew by 2.7 percent. The transport, storage and communications industries decreased by 0.2 percent (0.8 percent in Q4), dragged by falls in publishing activities, telecommunications and computer programming activities.

By contrast, government and other services grew by 0.5 percent (from 0.3 percent in Q4), with human health activities and education being significant contributors, reflecting their large weights within GDP. Business services and finance grew by 0.7 percent (from 0.5 percent in Q4), with accounting activities and travel agency activities both performing strongly in this quarter.

Within the production aggregate: manufacturing increased by 0.5 percent (from 1.2 percent in Q4), due mainly to a large rise in the manufacture of motor vehicles industry; mining and quarrying increased by 1.3 percent (from -6.9 percent in Q4); and water supply, sewerage, waste management and remediation activities increased by 0.5 percent (from 0.9 percent in Q4). However, these positive growths were partially offset by a 3.2 percent decrease in electricity, gas, steam and air conditioning supply (from 4 percent in Q4).

Construction output was estimated to have increased by 0.2 percent, following a growth of 1 percent during Q4 2016.

Agriculture output expanded 0.3 percent following a growth of 1 percent in the previous period.  Agriculture is the smallest of the main industrial groups with a weight of less than 1 percent in the output measure of GDP. 

Compared with the same quarter of 2016, the economy grew 2.1 percent, accelerating from a 1.9 percent expansion in the previous period but missing market expectations of a 2.2 percent gain.

UK Q1 GDP Growth Weaker Than Expected