Retail spending lifted UK economy in January

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The UK economy grew by 0.2% in January 2024, driven by retail sales and an increase in construction activity.

It comes after gross domestic product (GDP) decreased by 0.1% in December 2023. The economy fell into recession at the end of the year after two consecutive quarters of GDP decline.

“The economy picked up in January with strong growth in retail and wholesaling,” said Liz McKeown, director of economics statistics at the Office for National Statistics (ONS). “Construction also performed well with housebuilders having a good month, having been subdued for much of the last year.

“These were partially offset by falls in TV and film production, lawyers and the often-erratic pharmaceutical industry.”

Over the last three months, the economy contracted slightly.

GDP is estimated to have fallen by 0.1% in November to January compared with the previous three-month period, August to October.

James Smith, developed markets economist at ING, said that the latest data is “consistent with the gradual recovery in activity that we expect over the coming months”.

He added that the GDP decline seen in the fourth quarter of 2023 is “unlikely to be repeated” in the first quarter of 2024.