UK Economy Contracts, Services Sector a Major Burden
The UK economy shrank in April, marking the first monthly contraction since August last year. UK GDP fell 0.1% month-on-month, in line with market expectations, after growing 0.3% in March.
The main pressure came from the services sector, which fell 0.2%. The largest negative contributors came from administrative and support services, which fell 2.2%, and the arts, entertainment, and recreation sector, which fell 4.3%.
Wholesale and retail trade also weighed on growth. This category, which includes motor vehicle repairs, fell 0.4%, while retail excluding motor vehicles and motorcycles declined further by 1.3%.
However, not all sectors weakened. Information and communications was the main support, rising 1.1%, recording its sixth consecutive monthly growth. This indicates that the digital sector remains a relatively strong part of the UK economy.
For the market, the GDP contraction reinforces the signal that the UK economy remains fragile. This data could limit the Bank of England's room to be overly aggressive, especially if the slowdown in activity begins to pressure consumption and the services sector. However, the pound's direction remains dependent on a combination of inflation data, the labor market, and the Bank of England's next policy signals. (asd)
Source: Newsmaker.id
