UK GDP Review: GDP Upside Surprises Persist?

Perhaps it is a supreme irony that just as business surveys suggest clear weakness, if not fresh contraction, the actual real economy has surprised on the upside, even now into the second month after the Middle East conflict started.  Indeed, and in perspective, official GDP data suggest that since Labour took office in July 2024, the economy has grown a cumulative 2%-plus, ie over 1% per year.  And providing yet more apparent signs of such economic resilience and, once again exceeding expectations, GDP grew by 0.3% m/m in March 2026, following growth of 0.4% in February and only fell back 0.1% in April.  We think this is more an aberration than a better trend and partly a result of poor seasonal adjustments, meaning that we see May GDP falling back further, this chiming with both weak(er) business survey activity (Figure 1) and employment signals and where what growth may actually have occurred likely to be short-lived boost in inventory building.   But the data implies a much better productivity backdrop.