UK's economic boom rapidly runs out of steam with growth set to peter out

Britain's post-recession boom is petering out, with the economy returning to normal growth levels, new data from closely watched economic indicators are expected to show this week.

For the first quarter of this year, gross domestic product grew by 0.6 per cent, ending the “shallow recession” the UK fell into during the second half of last year as the economy fell 0.1 per cent and 0.3 per cent in the third and fourth quarters.

This week the S&P Global / CIPS purchasing managers indices are tipped to show growth in services and construction has slowed, while manufacturing saw a resurgence. That is consistent with the economy returning to its pre-recession tepid quarterly growth rate.

For May, the services sector is expected to register a PMI score of 52.9, versus 55 the month before. A PMI score above 50 indicates growth, while a score below points to contraction. Construction is forecast to be down from 53 to 52.3, while manufacturing is expected to rise from 49.1 to 51.3.

As a result, Capital Economics senior UK economist Peter Wishart said the PMI forecasts “imply that GDP growth eased” in May.

Peter Arnold, EY UK chief economist, said the fall in construction and services output, and increase in manufacturing, is consistent with more normal growth rates for the economy. On Friday, new data from Halifax is expected to show house price growth is picking up, up 0.3 per cent in May, versus the 0.1 per cent gain in April.