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Under Pressure


Trend Condition Remains Bearish

By Les Commons, Laurie Laird and Shaily Mittal
LONDON (MNI) - GDP growth accelerated to an as-expected 0.5% in the 
first quarter, a 1.8% annual gain, lifted by unique factors linked to 
the original March 29 Brexit date. 
The following are the key points from UK GDP data published Friday by 
the Office for National Statistics.
     - Manufacturing activity surged by 2.2%, adding 0.22 percentage 
points to total GDP growth, the biggest positive contribution since Q3 
1999. ONS officials noted widespread accleration of deliveries for both 
domestic and export orders. 
     - Government spending jumped by 1.4% in Q1, the biggest increase 
since Q1 2012, adding 0.25 percentage points to growth. A spokesperson 
would not be drawn on whether the leap was related to Brexit 
preparations, noting only that the additional expenditure was spread 
across government departments. 
     - The trade deficit ballooned to Stg18.337 billion in Q1, from 
Stg9.438 billion in Q4, subtracting a record 2.16 percentage points 
from total GDP growth. 
     - Business investment rose by 0.5%, breaking a four-quarter run of 
declines, the longest since the financial crisis. The spending was 
concentrated on information technology and plant and equipment. Again, 
officials refused to be drawn on a link to Brexit. 
     - Household spending accelerated to 0.7% from 0.3% in the fourth 
quarter, adding 0.42 percentage points to GDP. ONS officials were unable 
to provide a breakdown of spending.
     - Service sector growth slowed to 0.3% in Q1, with financial 
services continuing to dampen the sector, retreating by 0.4%, after a 
0.1% decline in the month of March. Financial services have not expanded 
for 15 straight months, the longest stretch of decline since records 
began in 1997.
     - The quarter ended on a weak note, suggesting a strong role for 
Brexit-related activity in the early months of 2019. GDP retreated by 
0.1% in March, with a 0.9% m/m increase in manufaturing providing the 
only real bright spot in the economy.