GDP falls 0.1% in May

The economy contracted by 0.1% in May, and saw no growth overall in the last three months, although accountancy services revenue was up 2%

GDP was down by 0.1% in May, following growth of 0.2% the previous month, partly due to the extra bank holiday for the King’s Coronation, according to the Office for National Statistics (ONS).

More broadly, GDP showed no growth in the three months to May, when compared with the three months to February 2023.

There was no growth in the services sector in May following slight uptick of 0.3% in the previous month.

With falls in six of the 14 sub-sectors, wholesale and retail trade saw the steepest drop, followed by administrative and support services, accommodation and food, and financial services.

The UK accounting industry accounted for £3.6bn of revenues in May 2023, showing a rise of 2.1% on the previous month.

The total UK services sector (including accounting) had a turnover of £229.5bn in May, up 7% from April 2023.

Julie Matheson, regulatory partner at Kingsley Napley LLP, said: ‘The accounting industry continues to grow despite a myriad of headwinds. May’s figures will provide comfort to industry leaders who are considering their cost base and talent challenges at a set time of high inflation across their business.’

Output in consumer-facing services fell by 0.2% in May, after growth of 1.1% in the previous month – largely a result of food and beverage services, which fell by 1.1%.

The next largest contribution came from property sales which fell 0.7% after a similar fall in April.

Production output fell by 0.6%, following a fall of 0.2% in April. Electricity, gas and air conditioning supplies fell by 0.2% and were the largest contributor to the fall in production output.

Darren Morgan, director of economic statistics, ONS, said: ‘GDP fell slightly as manufacturing, energy generation and construction all fell back with some industries impacted by one fewer working day than normal. Despite the Coronation bank holiday, pubs and bars saw sales fall after a strong April. Employment agencies also saw another poor month.

‘However, services were flat overall with health recovering, with less impact from strikes than in the previous month, and IT also had a strong month. Across the last three months as a whole, the economy showed no growth.’

Kitty Ussher, chief economist at the Institute of Directors, said: ‘The ONS GDP data for May is consistent with our survey data that shows confidence flatlining in May after growth in the earlier part of the year.

‘A large 3.5% monthly fall in ‘employment activities’ within the service sector is further evidence that the labour market is now cooling, leading to lower demand for the services offered by recruitment companies.

‘Perhaps perversely the Bank of England may take some comfort from this weaker output data, as it suggests demand may be cooling, which in turn reduces inflationary pressure.’

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