United Kingdom economic growth picks up as stockpiling boosts manufacturing

UK economy in focus for Sterling

United Kingdom economic growth accelerated in the first quarter of this year, driven by the highest quarterly pick-up in manufacturing since the 1980s as the original Brexit deadline loomed.

The UK economy grew 0.5% in the first quarter, according to preliminary figures released by the Office for National Statistics on Friday.

Manufacturers delivered orders early as companies cleared their order books ready for the original Brexit withdrawal date of 29 March.

Meanwhile, manufacturing increased by 1.5% in January, but by only 0.9% in March. "When you look at the broader picture, what's happening in Germany, what's happening in the EU27, this is good solid performance for the United Kingdom economy, given the circumstances".

United Kingdom gross domestic product expansion outpaced the 0.2% seen in the final three months of 2018, the Office for National Statistics said in a statement.

The UK's trade deficit doubled in 1Q19, from £8.9 bln to £18.3 bln, which is a negative development, given the gradual reduction of the deficit over the past few quarters.

The manufacturing sector grew in the first three months at its fastest rate since 1988, while the pharmaceutical industry also grew by 9.4 per cent in the same time period.

Canada: Employment likely to fall by 10k in April - TDS
Year-over-year average hourly wage growth for all employees in April was 2.5 per cent, up from a reading of 2.4 per cent in March. That trounced the median economist forecast for a gain of 12,000 positions.

However, he said that he remained sceptical about whether the consumer growth is likely to be sustained.

Tej Parikh, senior economist at the UK-based Institute of Directors, said that this growth could well be just "a flash in the pan". This as the world economy is facing a gradual slowdown due to disruptions in global trade and lingering trade disputes between the USA and China, as well as the European Union - which Britain, for now, remains a part of.

'Jobs are still being created and wage growth remains strong.

"It's not surprising to see households and businesses protecting themselves against a potentially disastrous Tory no-deal Brexit", Shadow Chancellor of the Exchequer John McDonnell said. Business investment increased by 0.5 percent following four straight quarters of contraction.

In the first quarter, "businesses purchased more goods to keep in storage in the event of a no-deal Brexit affecting supply chains and the ability for businesses to the buy goods they need for production", the Centre for Economics and Business Research said in a note to clients on Friday.

UK's economy also managed to improve business investment, as this figure grew by 0.5%, beatins expectations which were for a 0.6% decline instead.

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