May: UK economic growth beats expectations, driven by retail and construction sectors

The UK economy recorded stronger-than-expected growth in May as shoppers returned to the high street and construction work picked up, according to official figures from the Office for National Statistics (ONS). The ONS said gross domestic product (GDP) rose by 0.4% in May, after a period of stagnation in April when consumer spending was hit by unfavourable weather conditions.

Economists had initially forecast GDP growth of 0.2% in May. Liz McKeown, ONS director of economic statistics, commented: “The economy grew strongly in May, with all major sectors reporting growth.”

She added: “Many retailers and wholesalers had a good month, with both recovering from a weak April.”

McKeown also noted that “construction expanded at its fastest pace in almost a year after a recent weakening, with housing construction and infrastructure projects driving the industry.”

Chart showing monthly economic growth (GDP) in the UK from May 2023. Source: ONS(Photo: PA Graphics/Press Association Images)

The services sector continues to be the main driver of UK economic growth, with economic growth reporting a fifth consecutive month, according to the ONS.

Retailers enjoyed a particularly strong month, with trade rising by 2.9% in May, recovering from a 1.8% decline in the previous month, which was attributed to poor weather. Accommodation and food services, which includes hotels and restaurants, also performed well, rising by 2.4%.

Elsewhere, construction saw output rise by 1.9%, with both new and maintenance work rising. Despite this positive rebound, the sector experienced a general recession in the three months to May as it grapples with the ongoing challenges of high interest rates.

Rachel Reeves (Photo: PA Wire/PA Images)

The UK economy unexpectedly picked up speed in May, raising the possibility of beating the Bank of England’s forecast of 0.5% growth in the second quarter, unless it slows significantly in June.