Britain’s economic recovery stumbled in May when growth slowed to 0.8% after a contraction in construction work and a slump in auto production.
It was the fourth consecutive month of GDP growth, and followed a 2% growth in April, but the slowdown in May was more pronounced than expected after economists in the city predicted an increase of 1, 5%.
The Office for National Statistics (ONS) said the manufacturing industry was hit by a computer chip shortage that has forced automakers to cut production.
As a result, the manufacturing of transportation equipment fell 16.5%, its biggest drop since April 2020 and the worst period of the coronavirus pandemic.
Wood and steel shortages crippled many construction projects and caused the construction sector to contract 0.8% for a second consecutive month.
In the three months ending in May, GDP grew 3.6%, mainly due to the strong retail sales during the period as non-essential shops, bars and restaurants opened.
The ONS said the broader service sector is growing as Covid-19 restrictions continue to ease, more people return to work and more students attend school .
The service sector rose 0.9% in May, driven by a 37.1% increase in accommodation and food services, with restaurants and pubs once again welcoming customers indoors.
“Despite the growth in consumer services, it is travel, transportation and other personal services that continue to help keep production below pre-pandemic levels,” the ONS said.
The economy was 3.1% smaller in May than it was in February 2020, before the pandemic.
Samuel Tombs, chief economist at Pantheon Macroeconomics, said GDP growth is likely to slow further over the summer. “A series of indicators suggest that economic activity stabilized in June. This probably reflects in part the weakening of some initial enthusiasm when businesses reopen.
“The rise in Covid-19 infections also appears to be prompting some people to return to work from home and to visit stores and places of services less frequently. In addition, the UK’s self-isolation rules are increasingly limiting the supply of labor, ”he said.
Rishi Sunak said government support for the economy kept him going until May.
“Our unprecedented support package – including business loans, the holiday scheme and a reduced VAT rate for the hospitality and tourism sectors – has protected millions of jobs and helped businesses survive pandemic, ”said the Chancellor.
“And with the number of people on leave halved in just three months as the economy reopens, it’s clear our jobs plan is working.
“The government continues to support the recovery, with the leave program in place until September and programs like Restart helping people who have sadly lost their jobs get back to work.”
TUC General Secretary Frances O’Grady said: “The Chancellor must respond to slowing growth to sustain the recovery. Cutting back on family support and cutting back on employer support too soon are big risks. He is expected to reverse the £ 20 reduction in universal credit and delay the increase in employers’ contributions to the leave scheme. “