The UK economy grew faster than expected in January and there were no revisions to December's figures meaning the recession headlines can be put away for a few months at least.
Monthly real gross domestic product (GDP) is estimated to have grown by 0.3% in January 2023, after falling by 0.5% in December 2022, according to figures from the Office for National Statistics (ONS). Analysts had expected a rise of 0.1%.
Looking at the broader picture, GDP was flat in the three months to January 2023.
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Output in consumer-facing services grew by 0.3% in January; this follows a fall of 1.2% in December.
Production output fell by 0.3% in January, following growth of 0.3% in December while the construction sector fell by 1.7% in January after being flat in December. There were no revisions to previously published data in this release.
Samuel Tombs, chief UK economist at Pantheon Macroeconomic, said the recovery in GDP in January comes as no surprise, he had forecast a 0.4% month-to-month increase, given that activity in December was depressed by several one-off factors.
Tombs still thinks that a shallow recession is the most likely outcome.
“Either way, the economy clearly is sluggish, and more importantly for the MPC, labour availability is improving and the rate of price increases is slowing.
“The jump in markets’ rate expectations over the last month, therefore, looks detached from both the economic data and Governor Bailey’s recent comments,” he noted.
ING Economics said the increase was faster than expected, though underlying volatility in the data means that GDP is effectively flatlining.
“Lower gas prices mean that any recession is likely to be very modest now – and may technically be avoided altogether,” the ING economists suggested.
“Overall though, today’s figures raise the chances that UK growth could come in flat or only slightly negative in the first quarter overall,” they added.