UK economy unexpectedly contracts in May

(Sharecast News) - British GDP eased in May, government data showed on Friday, weighed down by faltering performances in manufacturing and construction. According to the Office for National Statistics, monthly GDP fell by 0.1%. Most analysts had expected a 0.1% uplift, though it remained a marginal improvement on April's 0.3% decline.

Monthly services grew by 0.1%, following a 0.3% fall in the preceding month.

But production slid 0.9%, compounding the previous month's 0.6% decline, while construction all but reversed April's 0.8% growth, down 0.6%.

In the three months to May, however, real GDP was estimated to have grown 0.5% overall. That was supported by a rise of 0.4% in March, and strength in the service sector.

Liz McKeown, director of economic statistics at the ONS, said: "May's fall in production was driven by oil and gas extraction, car manufacturing and the often-erratic pharmaceutical industry."

The UK economy continues to face a number of global and domestic headwinds, from Donald Trump's swingeing tariff regime, and high interest rates to mounting costs - including a recent uptick in inflation - and weak consumer sentiment.

The Bank of England next meets to discuss rates in August and is widely predicted to trim the cost of borrowing in what would be its third reduction so far this year.

Ben Jones, lead economist at the CBI, said: "Today's data suggests that a sluggish recovery remains the likeliest path in the near-term amid persistent trade uncertainty, a loosening labour market and slowing growth in real incomes. And with business costs rising, many firms are maintaining a cautious approach to investment."