UK Economy Grows Marginally As Estimated; Retail Sales Rebound Unexpectedly

(RTTNews) - The UK economy logged a marginal growth as initially estimated in the fourth quarter as the decline in industrial production was offset by the growth in services and construction sectors, official data showed Friday.

Another data revealed that retail sales expanded unexpectedly in February driven by the rebound in non-food store and auto fuel sales.

Gross domestic product edged up 0.1 percent sequentially in the fourth quarter after remaining flat in the third quarter, the Office for National Statistics said. The ONS confirmed the initial estimate.

On a yearly basis, economic growth was revised up to 1.5 percent from 1.4 percent. On the production-side, the dominant services sector edged up 0.1 percent and construction grew 0.3 percent. Meanwhile, production fell 0.4 percent.

The ONS upwardly revised GDP growth for the whole year of 2024 to 1.1 percent from 0.9 percent. This followed an unrevised increase of 0.4 percent in 2023.

Earlier this week, the Office for Budget Responsibility downgraded its growth projection for 2025 to 1.0 percent from 2 percent.

Overall retail sales logged a 1.0 percent monthly growth after rising 1.4 percent in January, the ONS said in a separate communiqué. Sales were forecast to fall 0.3 percent.

Excluding auto fuel, retail sales were up 1.0 percent, following January's 1.6 percent gain and confounded economists' forecast of 0.5 percent drop.

Non-food store sales, total of the department stores, clothing, household and other non-food stores, increased 3.1 percent, in contrast to the 1.6 percent decrease. This put monthly sales volumes at their highest level since March 2022, the ONS said.

Sales of automotive fuel rose 0.7 percent, offsetting January's 0.7 percent fall. By contrast, food store sales dropped 2.0 percent, reversing a 4.8 percent rise.

Year-on-year, retail sales growth picked up to 2.2 percent from 0.6 percent in January. Economists had forecast a 0.5 percent rise.

Excluding auto fuel, retail sales grew 2.2 percent annually, while economists had forecast annual growth to halve to 0.4 percent from 0.8 percent.

Another data showed that the UK visible trade gap widened to GBP 17.8 billion from GBP 17.4 billion in December. At the same time, the total trade deficit dropped to GBP 2.6 billion from GBP 2.8 billion in the previous month due to an increase in services surplus.