Construction industry helps bolster the UK economy in 2024

The U.K. gross domestic product decided to stretch its legs and grow by 0.2% in January, according to the Office for National Statistics.

In January, construction output surged by 1.1%, rebounding from a period of decline, though it decreased by 0.9% over a three-month period. The services sector, a significant driver of the U.K. economy, experienced a 0.2% increase in January, making a notable contribution to overall growth, while production output declined by 0.2%.

Despite the month-on-month growth, GDP was estimated to have contracted by 0.3% compared to the previous year in January, and by 0.1% over the three months leading up to January 2024.

Jack Meaning, chief U.K. economist at Barclays, cautiously acknowledged the improvement compared to the end of the previous year. However, he emphasized the need for sustained growth to confirm a positive trend.

James Smith, developed markets economist at ING, expressed optimism regarding a gradual recovery in activity in the coming months. He also suggested that the decline in overall fourth-quarter GDP, marking the second consecutive quarter of negative growth and a technical recession, is unlikely to be repeated in the first quarter of 2024.