The UK economy expanded at the slowest pace in more than five years in the first quarter, as activity was damped by severe weather, the Office for National Statistics said Friday.
Gross domestic product grew only 0.1 percent in the first quarter, the weakest since the fourth quarter of 2012. Economists had forecast the sequential growth to slow marginally to 0.3 percent from 0.4 percent in the fourth quarter.
The production-side breakdown showed that the slowdown was driven by a 3.3 percent fall in construction output.
Production rose 0.7 percent with the pace of manufacturing growth easing to 0.2 percent. The services industries were the largest contributor to GDP growth, with output rising 0.3 percent in the first quarter.
Farm output contracted 1.4 percent, but it contributed only negative 0.01 percentage points due to its low industry weight.
On a yearly basis, GDP expanded 1.2 percent in the first quarter, slower than the expected growth of 1.4 percent.
The ONS said while some impacts on GDP from the snow in the first quarter have been recorded for construction and retail sales, the effects were generally small, with very little impact observed in other areas of the economy.
The Monetary Policy Committee of the Bank of England is unlikely to be confident enough in two weeks’ time that there is not some underlying weakness, Paul Hollingsworth, an economist at Capital Economics, said.
As a result, the bank is unlikely to raise the interest rates in May. Instead, the bank is expected to hike them again in August, Hollingsworth noted.
Another report from ONS showed that in the three months to February, services output increased 0.4 percent compared with the three months ending November 2017. In February, services output dropped 0.2 percent from the previous month.