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The UK economy picked up in January, raising hopes it could be on its way out of recession.
The economy grew by 0.2%, official figures show, boosted by sales in shops and online and more construction activity.
The Office for National Statistics (ONS) said the services sector led the bounce back.
This is an early estimate, but signals how the UK, which entered recession at the end of 2023, is faring.
Some experts said it could suggest the economy may be turning a corner after dipping into recession at the end of last year.
The services sector, which also includes things like hairdressing and hospitality, grew by 0.2% in January. It was the biggest contributor to the monthly rise overall, helped along by a strong performance on the High Street and spending in supermarkets.
It marks an improvement on the 0.1% decline in output seen in December as retailers failed to draw in shoppers who had opted to spend their money in earlier sales in the run-up to Christmas.
Liz McKeown, director of economics statistics at the ONS, said: “The economy picked up in January with strong growth in retail and wholesaling.”
“Construction also performed well with housebuilders having a good month, having been subdued for much of the last year.”
But these areas of growth were offset by falls in TV and film production, legal services and the pharmaceutical industry which can be quite volatile.
However, in the three months to the end of January, the production sector, which also includes manufacturing, fell by 0.2% and services were flat.
Ms McKeown said: “Over the last three months as a whole, the economy contracted slightly.”
People spending less, doctors’ strikes and a fall in school attendance dragged the UK into a recession at the end of 2023.
The economy shrank by 0.3% between October and December, after it had already contracted between July and September. The UK is in recession if it fails to grow for two successive quarters.
Responding to the latest figures, Chancellor Jeremy Hunt said: “While the last few years have been tough, today’s numbers show we are making progress in growing the economy – part of which makes it possible to bring down national insurance contributions by £900 this coming year.
“But if we want the rate of growth to pick up more we need to make work pay which means ending the unfairness of taxing work twice.”
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Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
