Key Points:
- UK growth was stagnant in April; three-month growth at +0.7%.
- Construction down 1.4%, production down 0.9%, services up 0.2%.
- National election and Bank of England’s policy meeting on June 20.
The economic landscape in the United Kingdom has experienced significant fluctuations in recent months, reflecting a blend of growth stagnation and sector-specific variances. The latest data from April 2024 reveals a complex picture of the nation’s financial health. With growth flat in April, the three-month growth rate is modest at 0.7%.
UK Economy: Construction Down 1.4%, Services Up 0.2%
In April 2024, the UK economy saw varied performances across different sectors. The construction sector experienced a notable contraction, with output declining by 1.4%. This drop contrasts sharply with the previous month’s overall growth rate of 0.4%. Meanwhile, production output also fell, recording a decrease of 0.9%. On a more positive note, the services sector, a significant portion of the UK’s GDP, managed a slight increase of 0.2%. Despite this, the overall economic growth remained stagnant at 0%.
Key Events: Election and Bank of England Meeting
Several crucial economic events are on the horizon, which could significantly impact market sentiment and economic performance. A national election will occur in a few weeks, which may introduce policy shifts depending on the outcome. Additionally, the Bank of England is set to hold a monetary policy meeting on June 20, where interest rate decisions will be closely watched. Labour and import data releases are also imminent, with the former expected on the Tuesday before the report and the latter on Wednesday.
UK Unemployment Peaks, Wage Growth 6%
Initial market bets had anticipated interest rate cuts in June. However, the current outlook suggests a minimal chance of such cuts, with attention shifting towards August or September for potential changes. Labour data indicates the highest unemployment rate in 2.5 years and a wage growth of 6%, underscoring the labour market’s pressures amidst economic uncertainties.
UK Economy: Imports Up 8.2%, Exports Unchanged
Trade data for April shows a significant increase in imports, which rose by 8.2%, while exports remained flat at 0%. This imbalance may reflect ongoing trade challenges and the impact of global economic conditions. Politically, the upcoming election in just over three weeks is poised to be a critical event. The incumbent Conservative Party, led by Prime Minister Rishi Sunak, is focused on addressing the recent fall in UK inflation. The Labour Party, as the main opposition, is likely to highlight economic records and propose alternative tax and spending plans.
