Monthly headlines:
- UK GDP growth slows to six-year low as construction output falls and services output weakens.
- UK real wage growth returns to positive territory as inflation continues to slow.
- While US GDP growth slows in Q1, IMF upgrades its global GDP growth forecast expectations.
The UK economy grew by 0.1% in Q1 2018, the slowest rate of growth since Q4 2012 and slower than the growth of 0.4% recorded in Q4. In annual terms, the UK economy grew by 1.2% in Q1, down from the growth of 1.4% recorded in Q4. Overall, the first estimate of UK GDP for Q1 2018 supports our view that growth in the UK economy is becoming more subdued.
Pay growth is now outpacing price growth for the first time since early 2017. However, while the end of squeeze on real wage growth is an important moment, maintaining positive real wage growth could prove challenging without sustained increases in productivity and relieving the high upfront costs which restrict pay increases.
The first estimate of US GDP revealed that the US economy, the world’s largest, grew at an annualised rate of 2.3% in Q1 2018, the slowest rate of growth since Q1 2017 and lower than the growth of 2.9% recorded in the previous quarter. The slowdown was largely driven by consumer spending, which accounts for two-thirds of US economic output, growing by 1.1% in Q1, a sharp slowdown from the 4% increase in Q4 2017.
For full details of this month’s economic review click here.
