The UK economy benefited from a retail rebound in May as the sector received a “double boost” from warm weather and the royal wedding.
The Office for National Statistics (ONS) said the the economy expanded 0.3% in May, while gross domestic product (GDP) rose 0.2% over the three months to May.
Both of those figures were in line with economists’ expectations.
The ONS’ head of national accounts, Rob Kent-Smith, said it showed a “mixed picture of the UK economy with modest growth driven by the services sector, partly offset by falling construction and industrial output”.
He added: “Retailing, computer programming and legal services all performed strongly in the three months to May, while housebuilding and manufacturing both contracted.
“Services, in particular, grew robustly in May with retailers enjoying a double boost from the warm weather and the royal wedding.
“Construction also saw a return to growth after a weak couple of months.”
The pound lost ground on the news to trade flat against the US dollar at 1.325.
Versus the euro, sterling was up 0.2% at 1.129.
The readings are the first in the new set of rolling estimates of GDP by the statistic agency, which previously provided only quarterly estimates of growth.
The ONS figures show that in the three months to May, services output increased by 0.4% compared with the three months ending February.
Month on month, services rose 0.3%, with wholesale, retail and motor trade making the largest contribution.
But construction output continued its recent decline on a three-monthly basis, falling by 1.7% in May, its third consecutive decrease.
This was driven by a fall in new work, which also fell for the third consecutive month, decreasing by 2.5%.
However, the ONS said that month on month, construction output showed signs of recovery in May, rising by 2.9% compared with April.
The sector was helped by private housing repair and maintenance work, which grew 7.3% in May following a weak start to the year.
PwC chief economist John Hawksworth said the recent rebound in services and construction output could result in a near doubling of growth in the second quarter, putting the Bank of England’s Monetary Policy Committee (MPC) on track to raise interest rates next month.
“We estimate that growth in the second quarter will end up at around 0.4%, given signs from business surveys of continued forward momentum in services and construction in June,” he said.
“This pick-up in growth could be enough to tip the majority of the MPC towards a rate rise in August, though this is not yet a done deal given continuing uncertainties over Brexit and rising global trade tensions.”
Bank of England Governor Mark Carney last week highlighted that a recent revision to the first quarter growth rate from 0.1% to 0.2% confirmed his view of the UK’s positive growth trajectory.
He said the incoming data gave him “greater confidence” that softer UK activity in the first three months of the year was “largely due to the weather, not the economic climate”.
The Bank is widely expected to raise interest rates from 0.5% to 0.75% in August.
The ONS’ data dump also showed that in the three months to May, production fell by 0.6% compared with the three months to February, due to a 1.2% contraction in manufacturing.
Month on month, total production decreased by 0.4% in May, led by falls in energy supply of 3.2% and mining and quarrying of 4.6%.
Manufacturing output increased 0.4% month on month. In the three months to May, production increased by 1.8% compared with the same three months to May 2017.
The total UK trade deficit widened £5 billion to £8.3 billion in the three months to May, mainly due to falling goods exports and rising goods imports.
Falling exports of cars and rising goods imports were mostly responsible for the widening.
The UK imported 55% of its goods from the EU and exported 51% of its goods to countries outside of the EU in the 12 months to May 2018, the ONS said.