Image source: Pixabay
 

• UK’s economy contracted by 0.1% month-over-month in May 2023, following a slight growth in April, weighed down by additional bank holidays and strikes.
• Production, water supply, manufacturing, construction, and consumer-facing services all experienced declines during the month.
• The three-month period ending in May showed no growth in the British economy, raising concerns about a potential contraction in Q2.
• UK’s trade deficit in goods expanded to GBP 18.72 billion, the largest gap since December 2022, due to a decline in exports and an increase in imports.
• Industrial production and manufacturing output both contracted in May, with notable declines in electricity, gas, steam, air conditioning, and wood, paper products & printing sectors.
• Imports from non-EU countries saw a significant rise, driven by machinery, transport equipment, and manufactured materials, while exports to the EU and non-EU countries declined.

The data suggests mixed performance across various sectors of the UK economy, with challenges in trade and industrial production, contributing to the overall contraction and widened trade deficit.

The UK economy is facing pressure from interest rate hikes aimed at combating inflation, which in turn is impacting production. Lower production levels have become an inflationary factor, but the tightening measures are expected to address this issue by reducing production costs and stimulating growth to counter the elevated prices in the UK.

2 Months Ago

Stock markets may experience upliftment from a potential dovish tone from the US Federal Reserve, given the lower-than-expected inflation data. However, looming recession concerns could drive investors towards safe-haven assets such as Gold, the Japanese Yen, or the Dollar. As a result, the stock market might face pressure due to this potential development.

More By This Author:

Swiss Franc Strengthens To Multi-Year High Amid US Inflation Data And Global Economic Concerns
WTI Crude Surges Above $75 As Russian Output Declines
Nikkei 225 And Topix Indexes Drop On Profit-Taking And Caution Ahead Of US Inflation Data