UK economic growth in the first quarter of the year was stronger than expected, thanks to a pick-up in services and industrial production.
Gross domestic product grew 0.2% month-on-month in March, data from the Office for National Statistics revealed on Thursday morning, when a flat month had been forecast after 0.5% growth in February.
It meant that UK GDP grew 0.7% in the first quarter compared to the final three months of last year, ahead of the 0.6% expected and up from 0.1%.
This made it the fastest-growing economy in the G7 during the quarter, followed by Canada at 0.4%, Italy at 0.3%, Germany 0.2% and France at 0.1%, with the US and Japan down around 0.1%.
Year-on-year GDP in Q1 was up 1.3%, better than the 1.2% consensus estimate but slowing from the previous 1.5%.
"The economy grew strongly in the first quarter of the year, largely driven by services, though production also grew significantly, after a period of decline," said the ONS's director of economic statistics, Liz McKeown.
"Growth in services was broad-based, with wholesale, retail and computer programming all having a strong quarter as did car leasing and advertising. These were only slightly offset by falls in education, telecoms and legal services."
The UK GDP bump of 0.7% in the first quarter will be "short-lived", argued Sanjay Raja, chief UK economist at Deutsche Bank, as exporters are likely to see "reduced demand as well from higher US tariffs and weaker global demand" in the second quarter.
He noted that what drove output higher was a small increase in household consumption, and much improved business investment and exports, up 6% and 3.5% respectively.
This was a result, he felt, of "some front-running of trade" as US President Donald Trump started to fire out new trade tariffs during the period.
Investment was focused primarily on aircrafts, ICT and machinery – "all things likely to have been subject to heightened trade uncertainty".
Raja added that higher unemployment and a drop off in real wage growth "won’t help household spending much either, as firms continue to tighten payrolls and pass on payroll cost increases."
George Lagarias, chief economist at Forvis Mazars, said the GDP figures showed the UK economy is "if nothing else, resilient", with output slowing less than anticipated, "mostly on improved services momentum".
Services output grew 0.7% in the quarter, with production up 1.1%, while construction was flat.
While the headline was a positive surprise, "we should not take comfort in the data, or any other data for that matter at the current juncture", Lagarias said.
"The American trade war is causing global macroeconomic volatility, so in the next few months we will likely see data behaving in unpredictable ways.
"This will be especially challenging for data-dependent policymakers, like the Bank of England. Ultimately, Mr Bailey and the rest of the committee might find themselves having to make big decisions with less data and more with economic intuition, exacerbating the risk of policy errors."
Ben Kumar, head of equity strategy at 7IM, said the GDP figures showed that "all else equal, the UK’s actually not in a bad place economically".
But he added that "unfortunately, all else isn’t equal", with export growth boosted by US companies getting ahead of tariffs.
"Really, what’s needed to properly supercharge growth in the UK is the construction sector to get going. In terms of employment multipliers, and GDP amplifiers, nothing beats a building boom," said Kumar.
"We’re definitely not there yet – with private commercial new work falling sharply. The good thing about construction is that it isn’t about tariffs – so it’s in the governments gift to get it going. The bad news is that it hasn’t happened yet."