The UK economy grew 0.2% in April as the service sector showed strength, the Office for National Statistics said.
The rise represents a reversal of the 0.3% decline seen in March, and leaves the economic picture very unclear.
In contrast to service sector businesses such as bars and restaurants, the construction sector struggled as the elevated Bank of England rate squeezed activity.
Despite the growth in April, the UK economy has barely avoided entering a recession with higher rates dampening activity, particularly in the housing market.
The latest update from the ONS leaves the Bank of England stuck between a rock and a hard place. The economy is clearly struggling under the weight of monetary tightening, but with growth still evident and inflation well above target it has little room to ease conditions.
Charles Hepworth, investment director at GAM Investments, commented: “The service sector was the principal driver of growth with restaurants and bars accounting for a large uptick in activity over the month as consumers ventured out in April after hunkering down through the bad weather in March.”
“It is perhaps quite a turnaround when most forecasters were expecting worse conditions for the UK economy at the start of the year with the effects of all the healthcare, education and transport strikes.”
“A more sobering assessment of the growth seen in April is that consumers are not overly daunted by higher prices having secured their wage growth demands. That could mean high prices will persist further exerting more pressure on inflation and keeping the BoE’s bias to further tightening,” he continued.
“Whilst a slowdown has been avoided in the short term, it is possibly what the BoE needs, without trying to sound too doom-ish in its never-ending battle with inflation.”
Jeremy Batstone-Carr, European Strategist at Raymond James Investment Services, said: “Today’s GDP growth of 0.2% proves that the UK economy opened the latest quarter more strongly than the previous quarter, boosting the possibility that economic activity will be resilient enough to help the UK sidestep a recession.
“However, it is far too soon to call the ‘all clear’, particularly with the Bank of England poised to remain on its rate-hiking mission to suppress inflation that remains too high for comfort.
“Following March’s dip in economic activity fuelled by industrial action, April saw fewer days lost to strikes and was accompanied by the retail sector springing back to action.
“Manufacturing and industrial production remain resilient after a solid first quarter, supported by a positive trend in vehicle production, gas output and mining activity.”
