Strong economic performance in June, but early indicators of possible difficulties ahead

Commenting on ONS data that showed monthly GDP growing by 0.5% in June 2023 and quarterly GDP up by 0.2% in the second quarter, Kitty Ussher, Chief Economist at the Institute of Directors, said:

“This is an encouraging set of data showing an economy performing strongly in June. There was decent growth in both retail and manufacturing, helped by a positive rebound effect from the previous month when activity had been reduced due to the extra bank holiday for the King’s Coronation.

“Looking across the full three months of the second quarter, we also see economic growth picking up compared to earlier in the year, although today’s initial estimates are subject to revision. In particular, car production has benefited from falling input prices, and consumer demand has also proved resilient, helped by decent weather in June.

“However the quarterly data also shows a worrying decline in business investment in ICT and machinery following the expiring of the government’s super-deduction allowance at the end of March. It also shows falls in expenditure on scientific R&D, advertising and market research, which could be an early indicator of difficulties ahead.”