Services growth boost to UK economy

If you are considering investment planning in Cheshire, it is worth considering the wider national economic picture.

The latest data from the Office of National Statistics (ONS) reveals the UK economy grew 0.4% in May, boosted in large part by the services sector. The figures were double what analysts predicted and came on the back of flat growth in April. Services output grew 0.3% in May, the fifth consecutive month it has risen.

In other sectors, production output was up 0.2%, while construction jumped by 1.9%. Indeed, the construction industry grew at the fastest rate in almost 12 months, boosted by a number of house building and infrastructure projects.

The positive figures have been attributed to good weather, meaning that more people were outside, whether socialising in pubs enjoying the European Championships, buying in stores or, in the case of builders, working for longer in more benign conditions.

While it is important not to extrapolate too many trends from seasonal upticks, there are signs consumer confidence is returning as inflation fades, and coupled with positive growth data, this is leading some analysts to speculate on whether the Bank of England’s Monetary Policy Committee (MPC) will cut interest rates when it reconvenes next month.

Some MPC members are said to be hesitant about cutting rates while there are still inflationary pressures on prices and wages. The base rate remains at a 16-year high of 5.25%, although inflation is within Threadneedle Street’s 2% target. Following the ONS announcement, the pound has also strengthened against the dollar to $1.287.

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