UK GDP was estimated to have increased by 0.1% in Q1 2018 as per the Office for National Statistics. We reported here at the end of March that UK households’ saving ratio fell to the lowest ever on record as mortgage and consumer credit outstanding hit the highest ever.
UK GDP growth was the slowest since Q4 2012, with construction being the largest downward pull on GDP, falling by 3.3%. Production increased by 0.7%, with manufacturing growth slowing to 0.2%; slowing manufacturing was partially offset by an increase in energy production due to the below-average temperatures.
The services industries were the largest contributor to GDP growth, increasing by 0.3% in Q1 2018, although the longer-term trend continues to show a weakening in services growth. While some impacts on GDP from the snow in the first quarter of 2018 have been recorded for construction and retail sales, the effects were generally small, with very little impact observed in other areas of the economy.
The services aggregate was the main driver to the growth in GDP, growing by 0.3% and contributing 0.21 percentage points.
Production continued to grow, with a rise of 0.7% in Q1 2018, contributing 0.10 percentage points to GDP. This was driven mainly by mining and quarrying, and electricity and gas. However, construction contracted by 3.3%, contributing negative 0.21 percentage points to GDP. Although agriculture contracted by 1.4%, the contribution was only negative 0.01 percentage points due to its low industry weight.
Services
Services grew by 0.3% in Q1 2018 when compared with the previous quarter. While three of the four sectors within services experienced growth this quarter, there was a fall in distribution, hotels and catering.
Despite services growth in the most recent quarter, the quarter on same quarter a year ago growth shows a longer-term weakening in this part of the economy, particularly in the more domestic consumer-facing industries.
Production
Production was estimated to have grown by 0.7% in Q1 2018, up from 0.4% in Quarter 4 (Oct to Dec) 2017. Within production, there was growth in three of the four sectors in Q1 2018.
Construction
Construction output was estimated to have decreased by 3.3% in Q1 2018, contributing negatively to GDP by 0.21 percentage points; this was the weakest quarterly construction growth since Quarter 2 (Apr to June) 2012.
Agriculture
Agriculture decreased by 1.4% in the first quarter of 2018. Agriculture is the smallest of the main industrial groups with a weight of less than 1% in the output measure of GDP.