UK GDP was today confirmed contracting 0.2% quarter-on-quarter in the second quarter after upwardly revised growth of 0.6% in the first quarter, notably marking the first time that the economy had contracted since the fourth quarter of 2012.
A sharp running down of stocks in the second quarter after the first quarter build-up which contributed to a slump in manufacturing output (along with car plant shutdowns in April) weighed heavily on the economy in the second quarter. There was also a renewed drop in business investment. Year-on-year growth slowed sharply to 1.3% from 2.1%, which was the equal lowest level since the second quarter of 2012.
There was always going to be some payback for the UK economy in the second quarter after first quarter GDP growth of 0.6% quarter-on-quarter was boosted by stockbuilding amid concerns that a disruptive Brexit could have occurred at the end of March.
So just as the first quarter overstated the strength of the UK economy so the second quarter overstated its weakness. However, taking the first two quarters of 2019 combined, the economy clearly markedly under-performed over the first half of the year amid Brexit, domestic political and global economic uncertainties
GDP contraction of 0.2% quarter-on-quarter in the second quarter was dragged down by a sharp 2.8% quarter-on-quarter relapse in manufacturing output after its robust first quarter expansion. Construction output also contracted (by 1.2% quarter-on-quarter) while services output could only edge up 0.1% – which was its weakest performance for three years.