UK GDP Falls Unexpectedly On Weak Construction
The UK economy shrank unexpectedly in February even before the government resorted to measures linked to lockdown to contain the spread of coronavirus, data from the Office for National Statistics showed Thursday.
Due to a sharp fall in construction, gross domestic product fell 0.1 percent month-on-month in February, confounding expectations for a growth of 0.1 percent.
In three months to February, GDP grew 0.1 percent, following no growth in three months to January. The rate came in line with expectations.
“Today’s figures show that in the three months to February, which was before the full effects of Coronavirus took hold, the economy continued to show little to no growth,” Rob Kent-Smith, Head of GDP at ONS said.
The 0.1 percent fall in GDP in February will be the last figure that looks anything like “normal” for a while as the coronavirus lockdown will mean that in March and April GDP will fall at a speed and magnitude that the UK economy has never endured before, Paul Dales, an economist at Capital Economics, said.
In February, the dominant service sector showed nil growth after rising 0.1 percent in January. At the same time, industrial production grew 0.1 percent driven by a 0.5 percent rise in manufacturing.
However, construction output declined 1.7 percent as wet weather and flooding hampered house building.
On a yearly basis, industrial production declined 2.8 percent, the same rate of fall as logged in January. Manufacturing output decreased 3.9 percent after falling 3.7 percent a month ago.
The ONS said only some UK businesses experienced partial factory shutdowns after supply chains in China were impacted in February.
Another report from the ONS showed that the visible trade deficit increased to a nine-month high in February. The shortfall surged to GBP 11.48 billion in February from GBP 5.76 billion in January. The expected level was -GBP 6 billion.
Exports of goods declined 10.8 percent from January, while imports advanced 6 percent in February.
The total trade balance, which combines goods and services, showed a deficit of GBP 2.79 billion versus a surplus of GBP 2.41 billion a month ago.
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