UK Q1 GDP rises 0.1% Q/Q after revision, unchanged from preliminary estimate

• The UK first quarter GDP rose 0.1% Q/Q and 1.2% y/y after revision.
• The main driver of the first quarter GDP was bad weather and falling retail sales.

The UK first quarter Gross Domestic Product (GDP) increased 0.1% over the quarter in the second estimate, the Office for National Statistics said on Friday. This is unchanged from 0.1% quarter-to-quarter rise reported in the preliminary estimate.

When compared to a year ago, the UK GDP increased 1.2% y/y, unchanged from the preliminary reading.

Within the structure on Q1 GDP, household spending grew by 0.2% over the quarter while business investment decreased by 0.2%, the ONS said in the report. From the sectoral point of view, services industries increased by 0.3% Q/Q; while construction decreased 2.7% Q/Q.

"While the bad weather had some impact on the economy, particularly in construction and some areas of retail, its overall effect was limited, with partially offsetting impacts in energy supply and online sales," the ONS wrote in the GDP report.

From the monetary policy point of view, the decelerating economic growth in the UK is in line with the expectations of the Bank of England that considers the first quarter UK GDP just a weather-related blip while presenting the May Inflation Report. “GDP growth is projected to pick up after the weak first quarter to annual rates of around 1,8% throughout the forecast period,” the Bank of England Governor Mark Carney said in the opening remarks at the press conference after publishing May Inflation Report on May 10.

This stance was also confirmed by the Bank of England Deputy Governor Sir Dave Ramsden who said on Thursday for that he agrees with the view of his colleagues from the Monetary Policy Committee that the first quarter UK economic slowdown was temporary.