UK GDP Takes a Tiny Dip, but Services Still Shine
In May, the UK’s Gross Domestic Product slipped by 0.1% from the previous month, undoing a 0.3% decline in April. Market watchers had eyed a modest 0.1% rise, so the results turned out a bit cooler than expected.
The Numbers in a Nutshell
- Services output: up 0.1%. The IT and professional services folks did enough to keep the sector positive.
- Construction output: down 0.6%. New homes and building projects are doing a bit of a crawl.
- Production output: down 0.9%. Factory floors and manufacturing lines didn’t exactly do a dance.
Industry Voices
Investment Manager Nicholas Hyett from Wealth Club weighed in: “Some strength in IT and professional services pushed services growth into the green zone for the month. Still, that wasn’t enough to counteract the pull‑back in manufacturing and construction, so the UK economy shrank unexpectedly in May.”
Why Might the Economy Slow?
- Higher U.S. tariffs have been a thorn in UK car manufacturers’ side, especially in the early part of this cycle.
- Changes to stamp duty have hit construction hard, slowing down the housing market.
- Rising living wages and higher national insurance rates are stretching the budget for labour‑intensive sectors like retail and leisure.
- Despite stock markets soaring to record highs, the macro‑economic picture remains shaky, with taxes likely to hike at the next budget.
Looking Ahead
It’s a mixed bag: if the heat wave of the market cools, we may see an economic deep freeze that could prompt the government to step in. For now, businesses and households stay on their toes, watching the tide shift.
