Surge in doctor visits fuels unexpected surge in UK economy

A surge in doctor visits led to an unexpected pick-up in UK economic growth in May, offsetting weakness in hospitality and consumer services spending.

Gross domestic product rose 0.5 percent after falling 0.2 percent in April, the Bureau for National Statistics said. Economists had forecast growth of 0.1 percent.

Manufacturing output and construction also expanded faster than analysts expected. GP visits rose 15% in England in May, delivering the strongest growth in services.

“Health has been the biggest driver as many more people are seeing GPs despite testing and tracing and the cessation of vaccination programs,” said Darren Morgan, director of economic statistics at the ONS.

The strength of health activity masked signs of weaker household spending. Consumer-facing services, including hospitality and retail, fell 0.1 percent.

Households spent less in shops and on going out, with official figures showing a 0.5 percent drop in retail and a 5.3 percent drop in sports, entertainment and recreation activities in May.

However, there was a surge in travel agency activity as families booked their summer vacations. Production in the travel sector rose 11 percent for the month as confidence in holiday booking increased after Covid restrictions ended.

The surge in holiday reservations is wreaking havoc at UK airports, with London’s Heathrow Airport urging airlines to stop selling flights.

“Road hauliers also had a busy month, while travel agents did well with pent-up demand for summer holidays,” Morgan said. “After several difficult months, there has been widespread growth across manufacturing.

The Bank of England forecasts a contraction for the second and fourth quarters of this year, followed by two years of stagnation. GDP is now 1.7 percent above pre-pandemic levels.

The result underscores the uncertain legacy that awaits the candidates vying to succeed Boris Johnson this autumn. This increases pressure on the government to find a solution to contain rising inflation and cost-of-living pressures that are weighing on consumer spending.

The economic path ahead could be even bleaker. While official estimates currently show the nation is likely to dodge two consecutive quarters of contraction, a surge in inflation has turned economists increasingly pessimistic.

A Bloomberg poll of analysts this week put the risk of a UK recession at 45 percent over the next 12 months, three times higher than the likelihood found by the poll in early 2022. Surge in doctor visits fuels unexpected surge in UK economy

Fry Electronics Team

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