This follows an unrevised drop of 0.1% in April and an unrevised 0.3% increase in March.
Services saw a 0.3% expansion in May, which the ONS noted was partially offset by decreases of 0.5% and 0.8% in production and construction respectively.
In the three months to May, real GDP saw an increase of 0.7% – a slight fall from 0.8% growth in the three months to April.
May’s growth is ‘better than expected’
Despite the small growth in May, the stability of the wider landscape remains tenuous, with factors such as the US-Iran conflict, an incoming Prime Minister and stubborn inflation all contributing to the uncertainty.
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Lindsay James, investment strategist at Quilter, explained: “Despite fears that momentum in the UK economy had faded, it has surprised with growth of 0.1% in May, reversing the 0.1% fall seen in April. GDP grew by 0.7% in the three months to May, better than the 0.5% expected, and the three months to April was revised up to 0.8%. Services output of 0.3% in May was a key driver of the growth, though it was offset by falls in production and construction.
“The conflict in the Middle East has already left a significant mark on the economy, and while today’s GDP print is better than expected, there is still a risk that the fallout is far from over. While the ceasefire announced earlier this summer briefly improved sentiment, renewed tensions and ongoing disruption have exposed how fragile the situation remains.
“Households are also yet to feel the full impact. While energy bills have risen following the latest increase in the price cap, higher food prices are still feeding through and will add further pressure to already stretched household budgets.”
James continued: “Meanwhile, the UK is braced for a new Prime Minister, and markets will be watching closely for any signals on Andy Burnham’s plans for spending, taxation and borrowing. What’s more, ongoing speculation over who will take the role of Chancellor is adding another layer of uncertainty for businesses and risks weighing further on confidence.
“All of this leaves the Bank of England with a tricky path to navigate. Growth is still relatively weak, and inflation risks remain very much alive, particularly with energy and commodity markets still vulnerable to further geopolitical shocks.”
