Industrial and construction output figures for May point to UK GDP growth of just 0.3 per cent in Q2, a slight improvement on 0.2 per cent in the first quarter.
Output data shows declines of 0.1 per cent for industrial production month-on-month and 1.2 per cent for construction.
EY Item Club chief economic adviser Howard Archer says the figures come on the back of several months of soft data and are set to drag of Q2 GDP growth.
“The mystery of the wide divergence between the very weak official data and much stronger business survey results continued to deepen. What’s more, the weakness in the official series has come despite the trade data finally reporting some strong growth in export volumes.”
Based on today’s data combined with disappointing PMIs across services, manufacturing and construction earlier in the week, EY Item Club now predicts GDP to have grown by 0.3 per cent with risks to that projection skewed to the downside.
It forecasts industrial production is likely to have contracted by 0.5 per cent in Q2, with construction output down 1.8 per cent.
A report released by Capital Economics before today’s figures forecast Q2 GDP growth to accelerate to 0.5 per cent, pointing to the expanding retail sector and all-sector PMIs.