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The UK economy recovered in January, raising hopes that it is emerging from recession.
Official figures showed economic growth was 0.2%, driven by increased sales in stores and online and construction activity.
The Office for National Statistics (ONS) said the services sector led the improvement.
This is an early estimate, but it shows how the UK will fare as it enters recession at the end of 2023.
Some experts said this could signal that the economy, which fell into recession late last year, may be turning a corner.
The service sector, which includes hairdressing and customer service, increased by 0.2% in January. Strong performance in the high street and spending in supermarkets contributed most to the month's overall rise.
This marks an improvement from the 0.1% decline in output seen in December as retailers were unable to attract shoppers who opted to spend money on early Christmas sales. .
Liz McCune, head of economic statistics at the ONS, said: “The economy improved in January, driven by strong growth in retail and wholesale trade.”
“Construction is also doing well, with home builders having a strong month after being weak most of last year.”
However, these growth areas were offset by declines in television and film production, legal services, and the highly volatile pharmaceutical industry.
However, in the three months to the end of January, the production sector, including manufacturing, decreased by 0.2%, and the service sector remained flat.
“Over the last three months, the economy as a whole has contracted a little bit,” McCune said.
The UK fell into recession at the end of 2023 due to falling public spending, doctors' strikes and falling school attendance.
The economy contracted by 0.3% from October to December, after already contracting from July to September. The UK will fall into recession if economic growth slows for two consecutive quarters.
Economic growth was one of Chancellor Rishi Sunak's five key pledges last year, as consumers and businesses were squeezed by rising prices and interest rates.
Most economists, politicians, and businesses want gross domestic product (GDP) to rise steadily. That's because it usually means people spend more, additional jobs are created, more taxes are paid, and workers get raises.
Responding to the latest figures, Prime Minister Jeremy Hunt said: “The last few years have been tough, but today's figures show that economic growth is making progress. “This will allow us to reduce the cost by £900.” Year.
“But if we want to accelerate growth even further, we need to pay for labor. This means ending the unfairness of double taxing labor.”
But Shadow Chancellor Rachel Reeves said Britain's economic situation remained “deteriorating” and Chancellor Rishi Sunak's claims that his economic plan was working were “already in tatters”.
Suren Till, head of economics at the Institute of Chartered Accountants in England and Wales, warned that results could be further weaker in February as wet weather could keep shoppers indoors.
He added that pressure from rising interest rates and persistent labor shortages could mean the economic recovery will be “even weaker” than predicted by the government's financial watchdog, the Office for Budget Responsibility (OBR). .
Coinciding with what could be the Chancellor's last Budget before the general election, the OBR forecast that the UK economy will grow by 0.8% this year and that inflation will hit the Bank of England's 2% target by the end of June. He said he expected it to be lower. .
However, the continued impact of higher interest rates aimed at slowing consumption and lowering prices, combined with weak corporate and public sector investment, could dampen the economy in the long term, the company's chief economist said. , said Yael Selfin. This was revealed by KPMG UK.
While other countries' economies are also struggling with rising costs due to energy price shocks and supply chain delays caused by the pandemic, growth in the UK has been stagnant for some time.
The ONS's Liz McCune appeared on the BBC's Today program on Wednesday and said a survey of 40,000 businesses showed more than one in five expected sales to rise in March. said.
He said businesses were reporting a “mixed picture” going forward, but “there are some signs of optimism”.
