UK Economy Shrinks 0.1% in May 2025, Raising Risk of Q2 Contraction
The UK economy contracted 0.1% month-over-month in May 2025, following a sharper 0.3% decline in April, according to official data released by the Office for National Statistics (ONS). The back-to-back drops fell short of market expectations for a modest 0.1% expansion and now raise concerns of a broader economic contraction in Q2 for the UK economy May 2025.
Key Takeaways from UK May GDP Report
- GDP fell 0.1% MoM, following April’s 0.3% contraction.
- Production output shrank 0.9%, led by weakness in manufacturing.
- Services grew 0.1%, aided by a 2% rise in IT and communications during the challenging period for the UK economy May 2025.
- Construction output declined 0.6%, reversing April’s growth.
- Three-month GDP (Mar–May) still shows 0.5% growth.
Sector Breakdown: What’s Dragging Growth
The decline was primarily driven by a 0.9% drop in production output, its second consecutive fall. The manufacturing sector plunged 1%, with steep declines in basic pharmaceuticals (-4.2%) and transport equipment (-1.3%). These factors impact the broader picture of the UK economy May 2025. Mining and quarrying also dipped by 3.2%.
While industrial activity suffered, utilities showed modest growth: water supply and waste management rose 0.8%, and electricity, gas, steam, and air conditioning increased by 0.3%.
In construction, output fell by 0.6%, following a gain of 0.8% in April—adding further weight to the downside pressure.
Read More: UK Manufacturing PMI Falls Sharply in April
Services Offer Some Relief 📊
| Sector | May 2025 Change | April 2025 Change | Notable Details |
|---|---|---|---|
| Services Sector | +0.1% | -0.3% | Boosted by 2% rise in IT and communication |
| Manufacturing | -1.0% | -0.6% | Major declines in pharma (-4.2%) and transport (-1.3%) |
| Production Output | -0.9% | -0.6% | Consecutive monthly falls |
| Mining and Quarrying | -3.2% | – | Further drag on industrial production |
| Construction Output | -0.6% | +0.8% | Volatile activity over past two months |
| 3-Month GDP Growth (Mar–May) | +0.5% | — | Still showing moderate resilience |
Risk of Quarterly Contraction Looms
Although the 3-month rolling GDP grew 0.5%, the monthly contractions in both April and May increase the likelihood of a Q2 contraction, especially if June data doesn’t rebound significantly. Weakness in industrial output and construction contrasts with modest gains in services.
Economists warn that prolonged declines in manufacturing and global demand uncertainties could weigh on future momentum within the UK economy May 2025. However, the IT and professional services sector remains a bright spot.
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