The U.K. economy appears to be on course for a stronger-than-forecast first quarter after gross domestic product unexpectedly rose in February, despite the escalating crisis over Brexit.
GDP gained 0.2 percent from January, when it jumped 0.5 percent, the Office for National Statistics said Wednesday. Economists had expected output to flat-line. It left the three-month growth rate at 0.3 percent.
It means the economy will expand 0.5 percent in the first quarter if GDP is unchanged in March -- more than double the pace of the previous three months. The Bank of England is forecasting 0.3 percent. The ONS said there was some anecdotal evidence of Brexit stockpiling, as companies brought forward orders before the original March 29 deadline for leaving the EU.
The pickup in February was broad based, with manufacturing rising 0.9 percent and construction gaining 0.4 percent. The poorest performer was the dominant services industry, where output rose just 0.1 percent.
Separate figures showed the trade deficit narrowed marginally in February to 14.1 billion pounds ($18.4 billion). Exports rose but there was little evidence in the data of firms hoarding foreign goods in case of a no-deal Brexit, with imports falling in both value and volume terms.
The strength of February left GDP 2 percent higher than a year earlier, the fastest annual growth rate since the end of 2017. But the first quarter will once again get no help from trade, with the deficit in goods and services set to widen.
Eleven of 13 manufacturing sectors saw output increase in February, driven by basic metals and computer, electronic and optical products. The sector helped overall industrial production grow 0.6 percent.
In the services sector, financial and insurance services reduced output for a 12th consecutive month, the longest run since records began in 1997. The accommodation and food services sector and information and communication also contracted.
Source : Bloomberg