UK economy grows 0.2% in February, beats expectations
The UK economy grew more than expected in February despite Brexit uncertainty, with manufacturing and industrial production figures also a beat, according to data released on Wednesday.
Gross domestic product grew by 0.2% on the month in February, slowing down from 0.5% growth the month before but coming in ahead of expectations for a flat reading, according to the Office for National Statistics.
In the three months to February, GDP was up 0.3%, in line with the previous period and ahead of the 0.2% growth pencilled in by analysts.
Head of GDP Rob Kent-Smith said: "GDP growth remained modest in the latest three months. Services again drove the economy, with a continued strong performance in IT.
"Manufacturing also continued to recover after weakness at the end of last year with the often-erratic pharmaceutical industry, chemicals and alcohol performing well in recent months."
David Cheetham, chief market analyst at XTB, said that while the nature of the GDP figures is "inherently volatile", the overall trend has no doubt improved.
"Having said that, the pace of growth is still sluggish at best when viewed at a rate of 0.3% for the past three months and this is also artificially inflated by Brexit stockpiling so the true figure is likely lower."
Industrial production rose 0.6% in February, driven by a 0.9% jump in manufacturing output. This was down from a 1.1% increase in January but ahead of expectations for a 0.2% rise.
Pantheon Macroeconomics economist Samuel Tombs said this might be due to a temporary boost to production from pre-Brexit stockpiling, which will unwind in the second quarter.
"In addition, the 0.4% month-to-month rise in construction output might have reflected the temporary influence of the mild weather enabling more work than usual to go ahead. Nonetheless, output in the services sector remains on a steady rising path; it increased by 0.1% month-to-month and by 0.4% on a three-month on three-month basis in February. The 0.8% three-month on three-month rise in output in the distribution, hotels and restaurants sub-sector shows that consumers are doing the heaving lifting.
"By contrast, output in the financial and business services sector fell by 0.1% on the same basis. Even so, consumers have the wind in their sails from rising real wages and increases in tax thresholds and, therefore, likely will continue to drive the overall economy forwards in Q2."
Tombs revised up his forecast for quarter-on-quarter GDP growth in the first quarter to 0.4% from 0.3%. "This forecast allows for a likely correction in output in the industrial, construction and retail sectors in March," he said.