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The UK economy defied expectations and grew 0.5% monthly in May, while industrial production strengthened and the nation's trade deficit narrowed, official figures showed on Wednesday.
According to the Office for National Statistics, the UK's trade deficit narrowed slightly to £9.75 billion from £9.81 billion in May.
The last monthly trade surplus was the £1.40 billion recorded in May 2021.
Exports rose 4.1% monthly in May to £61.11 billion from £58.68 billion. Imports were 3.5% higher at £70.86 billion from £68.49 billion.
On an annual basis, exports were 9.4% higher, while imports were up 19%.
EU exports rose 2.6% monthly in May, while imports were 5.2% higher. Exports to non-EU nations surged 13% in May from April, while imports were 3.2% higher.
Industrial production, meanwhile, rose 0.9% on a monthly basis in May, following a 0.1% decline in April.
May's growth was the joint-strongest since a 1.0% climb in November 2021. The figure for May topped FXStreet cited consensus which had forecast production to register no monthly growth at all.
On an annual basis, industrial output rose 1.4% in May, defying FXStreet-cited forecasts of a 0.5% decline, but slowing from a 1.6% rise in April.
Figures from the ONS also showed the UK economy defied expectations and strengthened in May.
UK gross domestic product grew 0.5% monthly in May, following a 0.2% decline in April. April's figure was upwardly revised from an initially reported 0.3% fall.
‘Monthly GDP is now estimated to be 1.7% above its pre-coronavirus pandemic levels,’ the ONS said.
UK GDP rose 3.5% in the 12 months to May, slowing a touch from 3.7% annual growth in April.
The ONS added: ‘Services output grew by 0.4% [monthly] in May 2022 as human health and social work activities grew by 2.1%, mainly because of a large rise in GP appointments, which offset the continued scaling down of the NHS Test & Trace and Covid-19 vaccination programmes.’
The retail sector struggled, however.
‘Output in consumer-facing services fell by 0.1% in May 2022, driven by a 0.5% fall in retail trade, and non-consumer facing services grew by 0.5% in May, following a fall of 0.8% in April,’ the ONS added.
Commenting on the figures, Dan Boardman-Weston, chief investment officer at BRI Wealth Management, said: ‘The worrying part of the data is that the consumer facing service sector continued to shrink, by 0.1%, driven by a 0.5% fall in retail trade. Production and construction growth came in relatively strongly at 0.9% and 1.5% respectively.
‘The GDP figures are likely to get worse over the coming months as pressures continue to mount on consumers and businesses as inflation remains high and interest rates continue to rise.’
Added Paul Craig, portfolio manager at Quilter Investors: ‘Today's figures wont do much to the Bank of Englands thinking. It will press ahead with interest rate rises as it looks to combat inflation and be seen to be doing something on a problem that it has been slow to act on.
‘While the underlying data for the economy is okay at the moment, these rate rises do have the potential to tip things the wrong way and create a recession.’
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