Breadth divergence is a troubling sign for the stock market

UK Economy Rebounded in May

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By Xavier Fontdegloria

The U.K. economy rebounded in May after contracting in the previous month, although the pickup in activity was likely a one-off boost rather than an improvement in the country’s underlying growth trend.

The U.K. gross domestic product increased 0.5% in May from the previous month, data from the Office for National Statistics showed Wednesday. Economists polled by The Wall Street Journal expected the economy to stagnate on month.

The economy registered growth across all main sectors, the ONS said. Services output expanded 0.4% on month and industrial production increased 0.9%, the data showed.

The growth rebound registered in May follows a 0.2% contraction in April. The Bank of England expects the U.K. economy to shrink in the second quarter as households’ incomes decline due to the cost of living crisis and pull back on spending.

The contraction of the U.K. economy in the second quarter should mark the first of a series of very bumpy quarterly growth prints, Deutsche Bank’s senior economist Sanjay Raja said in a note ahead of the release. “The risk of recession remains uncomfortably high, specially with the U.K.’s external backdrop deteriorating more rapidly than we anticipated some months ago,” he said.

Write to Xavier Fontdegloria at [email protected]

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