UK Q1 GDP Growth Slows More Than Estimate

UK's economic growth eased more than previously estimated in the first quarter due to the downward revisions to services and production.

Gross domestic product grew 0.2 percent sequentially in the first quarter instead of 0.3 percent estimated on April 28, the second estimates from the Office for National Statistics showed Thursday.

A similar slower growth rate was last seen in the first quarter of 2016. Quarter-on-quarter growth slowed from 0.7 percent registered in the final three months of 2016.

Households reduced their spending as high inflation weighed on purchasing power of consumers ahead of elections.

Household spending grew 0.3 percent, the slowest sequential growth since the fourth quarter of 2014.

Gross fixed capital formation climbed 1.2 percent from the previous quarter. Within total investment, business investment increased 0.6 percent to GBP 43.8 billion due to positive contributions from other machinery and intellectual property products.

The net trade deducted 1.4 percentage points from GDP growth as a weaker pound failed to boost exports.

At the May meeting, the Bank of England downgraded its 2017 growth outlook to 1.9 percent from 2 percent, citing weakening household spending.

The production-side breakdown of GDP showed that growth in the dominant service sector was revised down to 0.2 percent from 0.3 percent.

Likewise, total production increased by 0.1 percent versus the previous estimate of 0.3 percent.

Meanwhile, agriculture increased by 0.3 percent and construction by 0.2 percent, both in line with preliminary estimate.

Services output climbed 0.2 percent in March from the prior month, the ONS reported in a separate report. The largest contribution came from transport, storage and communication.