News Story

UK Economy Grows 0.3% in May, Keeping BoE Rate Hike Hopes Alive

- The UK economy grew at a solid pace in May, according to data released on Tuesday, likely keeping the Bank of England on track for an interest rate hike at its upcoming August meeting.

The Office of National Statistics said the economy grew 0.3% month-on-month in May, recovering from a sharp slowdown at the start of the year, where growth was just 0.2% in the three months to March.

The rolling three-month estimate showed that the economy grew 0.2% in the three months to May, reflecting the slower growth from the earlier months.

The ONS said growth remains modest and is heavily driven by the service sector. Declines in activity in construction and industrial output, as seen in the factory output data acted as a drag on growth, the report indicated.

It is the first time that the ONS released monthly economic growth figures and a rolling three-month figure, instead of a quarterly figure.

Under the new model, the GDP report will contain a significantly higher amount of data and allow for quicker estimates of growth, but it will be volatile and subject to revision.

The pound was little changed against the dollar for the day following the report, with GBP/USD last at 1.3257 rising as high as 1.3301 earlier.

Sterling was higher against the euro, with EUR/GBP sliding 0.15% to 0.8849.

]]> © Reuters.

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