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UK economic data reveals growth is moving faster than expected

Wednesday 12 May has been a big day for getting a sense of direction of the fortunes for the UK economy with no less than eight separate macro indicators released this morning from GDP and manufacturing and industrial production to business investment and trade balances.

Tuesday, May 11, 2021

Wednesday 12 May has been a big day for getting a sense of direction of the fortunes for the UK economy with no less than eight separate macro indicators released this morning from GDP and manufacturing and industrial production to business investment and trade balances. The first quarter saw GDP decline 1.5%, as expected, given the lockdown extensions and curtailment of consumer activity. On the other hand, the economy grew faster than expected in March at 2.1% and this is setting the scene for a potentially very strong rebound in Q2 of close to 5% growth, according to some forecasts. Manufacturing production showed a strong increase of 2.1% over March, almost double estimates, and industrial production followed with a similar forecast-beating of 1.8% advance over the month. This shows the more important rate of change at the back end of the first quarter which is giving direction to where the UK economy might be now – powering back into a strong recovery and getting the justified reward for fast vaccine distribution. A faster recovery changes the dynamic of central bank rate decisions and gilt yields are seeing a drift higher as the prospect of negative rates is further removed from their outlook.  

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Charles Hepworth

Investment Director
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