UK gross domestic product (GDP) increased by 0.1% month-on-month in May, following 0.3% growth in March and a 0.1% drop in April.

The latest data, published by the Office for National Statistics (ONS), showed the latest growth was driven by a 0.3% growth in services, offsetting 0.5% and 0.8% falls in production and construction.

The ONS revealed that real GDP grew by 0.7% in the three months to May compared to the three months to February. This follows growth of 0.6% and 0.8% in March and April respectively.

All three sectors saw real GDP growth in May, with construction output increasing by 1.6%. Services output grew by 0.7% and production output rose by 0.1%.

Sales and marketing director at Phoebus Software, Richard Pike, said that while it is encouraging, "the reality is the UK remains in a low-growth environment".

He stated: "While no one should get carried away by a single month's data, positive growth helps support confidence among consumers and businesses.

"If the economy can maintain a steady, sustainable growth path, that should gradually feed through into higher transaction volumes, greater market confidence and increased investment in new housing supply. For a housebuilding sector that has faced a number of challenges in recent years, any evidence of improving economic stability will be welcomed.

"We’ve got a new PM waiting in the wings and we’re eagerly awaiting more detail about his polices. Some people are talking about a ‘Burnham Bounce’ so it will be interesting to see what impact he, and a potential new chancellor, will have on the economy."

Investment strategist at Quilter, Lindsay James, concluded: "The conflict in the Middle East has already left a significant mark on the economy, and while today’s GDP print is better than expected, there is still a risk that the fallout is far from over. While the ceasefire announced earlier this summer briefly improved sentiment, renewed tensions and ongoing disruption have exposed how fragile the situation remains.

"Households are also yet to feel the full impact. While energy bills have risen following the latest increase in the price cap, higher food prices are still feeding through and will add further pressure to already stretched household budgets.

"All of this leaves the Bank of England with a tricky path to navigate. Growth is still relatively weak, and inflation risks remain very much alive, particularly with energy and commodity markets still vulnerable to further geopolitical shocks."

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