The U.K. economy grew by less than expected in May, as the country began to gradually ease lockdown measures.
Official figures revealed Tuesday that GDP expanded by 1.8% in May on the month. Economists polled by Reuters had expected a monthly rebound of 5.5%.
"Despite this, the level of output did not recover from the record falls seen in March and April 2020 and has reduced by 24.5% compared with February 2020, before the full impact of the coronavirus," the Office for National Statistics said in its release.
The reading comes after a 20.4% monthly contraction in April, the country's sharpest on record, during the height of its widespread coronavirus restriction measures which ravaged economic activity.
Over the three months to the end of May, GDP contracted by 19.1%. Throughout the 2008 recession, GDP shrunk by no more than 2.1% in a single quarter, the ONS highlighted.
"Manufacturing and house building showed signs of recovery as some businesses saw staff return to work," said Jonathan Athow, deputy national statistician for economic statistics.
"Despite this, the economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck."
He highlighted that while the retail sector saw record online sales in May, many other areas of the economy remained in the "doldrums" and saw further declines as lockdown measures remained in place.
'Choppy waters ahead'
Robert Alster, head of investment services at Close Brothers Asset Management, said Tuesday's figures were "undoubtedly worrying" and pointed to "choppy waters ahead."
"Jobs, both on the high street and in industry, are disappearing at an alarming rate and there are no signs yet of any real improvement in the U.K. labor market," he said.
Finance Minister Rishi Sunak confirmed last week that the U.K.'s furlough scheme, which subsidizes up to 80% of the wages of 9.3 million furloughed workers and is largely credited with mitigating the economic hardship of the pandemic, will be withdrawn in October.
"With jobs critical to supporting consumption, it's difficult to know whether the Chancellor is being too bullish in his determination to withdraw the Jobs Retention Scheme by October. There's no question that this decision risks more economic contraction," Alster said.
However, Quilter Investors Portfolio Manager Paul Craig said that while the figures indicate that the recovery is unlikely to be quick, they do signal that it has begun.
"Provided the UK doesn't suffer further shutdowns like the one experienced, we should begin to see the shoots of this recovery play out in the next few updates coming," Craig said in a release Tuesday.
"Given this is a fairly backward looking data set, it is important investors do not lose sight of the opportunities that are available in the UK as the economy attempts to fire on all cylinders again."