Britain's Economy Recovers From Q1 Hiccups: 5 Stocks To Buy

Even as the country was preparing for national elections and the commencement of Brexit talks, Britain’s rate of growth slowed sharply in the first quarter. This could not have come at a worse time since it was economic resilience which had bolstered the country in the aftermath of last year’s surprise Brexit vote.

However, data released immediately after the GDP report depict a brighter economic picture. Gains in manufacturing, services and construction signal all-around economic improvements. Additionally, a closer look at GDP data indicates that the situation is not as bad as it seems. This is why it makes good sense to invest in British stocks at this time.

Data on Services, Manufacturing, Construction Improve

Last week, data released by IHS Markit showed that its services PMI for Britain increased from the level of 55.0 recorded in March to 55.8 in April. This was the sharpest pace of growth experienced in four months and is well ahead of the pace experienced for much of last year. According to some economists, this level of services growth is consistent with a quarterly pace of 0.7%, well above the 0.3% pace experienced in the first quarter.

This was the third in a series of positive reports about the economy released last week. The manufacturing sector expanded at its fastest pace in three years in April and exceeded most expectations. The IHS Markit CIPS manufacturing PMI increased from 54.2 to 57.3 in April. Data from IHS Markit also showed that the pace of hiring increased even as companies boosted production levels.

Additionally, construction growth for the country touched its highest level in four months. IHS Markit’s construction PMI increased from 52.2 in March to 53.1 in April. Construction also reported a pickup in hiring even as April’s expansion was attributed to an increase in civil engineering and residential construction activity.

Is Q1 GDP Data Really Disappointing?

At first glance, the first quarter GDP release seems rather dismal. Not only was the quarterly expansion of 0.3% a decline from the preceding quarter’s figure of 0.7%, it also came in below most forecasts, which were hovering around 0.4%. But the situation is not as bad as it seems. Firstly, the annual rate of growth was recorded at 2.1%, which is only a shade below the official projection of 2.2%.

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