State of the Economy: June 2019

United Kingdom Summary

GDP growth picked up in Q1 2019.

UK GDP grew 0.5% in the first quarter of 2019, up from 0.2% growth in the final quarter of 2018.

Growth was broad-based with a pickup in growth in the Production (1.4%) and Construction (1.0%) sectors, while output growth in the Services (0.3%) sector eased slightly.

GDP fell 0.4% over the month of April driven by a 2.7% fall in Production output. This reflected a decline in transport equipment, due largely to the planned car manufacturing shutdowns around the original UK EU exit date in March.

Labour market continues to perform strongly in 2019.

Latest data for Feb-April 2019 show that UK unemployment fell to 3.8%, its joint lowest rate since 1974.

The employment rate rose over the year to 76.1% - its joint highest on record – with 32.8 million people in employment.

The inactivity rate rose over the quarter to 20.8%, however remains close to its record low of 20.7%.

GB nominal and real pay continued to strengthen in 2019 growing 3.4% and 1.5% over the year to April.

Labour productivity increased by 0.3% in Q4 2018, however contracted by 0.1% over the year as a whole.

CPI inflation returns to 2.0% in May 2019.

In Q1 2019 the inflation rate fell below 2% for the first time since February 2017 before edging back up to 2.1% in April.

The inflation rate returned to 2.0% in May with downward contributions to the rate from transport and alcoholic beverages and tobacco.

Brexit uncertainty weigh on UK growth forecasts for 2019.

The Bank of England forecast the UK GDP growth to pick up slightly to 1.5% in 2019, moderated by continued Brexit uncertainty and soft global growth.

The IMF forecast the UK economy to slow in 2019 to 1.2% before rebounding to 1.4% in 2020.