UK Economy Expands 0.3 Percent in January

Its services sector grew by 0.5 percent, with the largest contributions coming from education, transport and storage, human health activities, and arts, entertainment and recreation activities, all of which have rebounded after falls in December 2022, the Office for National Statistics (ONS) said.

The economy partially bounced back from the large fall in December, while across the last three months to January and over the last 12 months, the gross domestic product (GDP) has shown zero growth, ONS Director of Economic Statistics Darren Morgan said.

"The main drivers of January's growth were the return of children to classrooms, following unusually high absences in the run-up to Christmas. The Premier League clubs returned to a full schedule after the end of the World Cup and private health providers also had a strong month," Morgan added.

These were somewhat offset by a notable drop in construction with a slowdown in infrastructure projects and housebuilding having another poor month, partly due to heavy rainfall, according to Morgan.

While the monthly expansion further allayed recession fears facing the UK, concerns remained. GDP in January was 0.04 percent below its fourth quarter (Q4) average, highlighting that a quarter-on-quarter contraction in first quarter (Q1) remains within reach, said Samuel Tombs, chief UK economist at Pantheon Macroeconomics consultancy.

"The slight rebound in growth at the start of the year wasn't altogether surprising, given the sharp drop in December. But activity is likely to be subdued in the near-term, given the headwinds of high inflation, still-high energy prices and rising interest rates," Ben Jones, lead economist at the Confederation of British Industry, said.

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