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The UK’s Public Sector Net Borrowing reached £16.44 billion in March, above the forecast of £15.40 billion and up from £12.31 billion a year ago. Meanwhile, the Public Sector Net Cash Requirement stood at £2.694 billion, lower than the previous figure of £6.360 billion.

The UK’s Retail Price Index (RPI) data for March indicates a modest cooling in inflation:

• RPI (YoY): 3.2% (matching forecast, down from 3.4%)
• RPI (MoM): 0.3% (below forecast 0.4% and prior 0.6%)
• Core RPI (YoY): 2.8% (down from 3.0%)
• Core RPI (MoM): 0.3% (half the previous month’s 0.6%)

The data shows a slowdown in retail price growth, supporting the narrative of easing inflation pressures across the UK economy. This could give the Bank of England more confidence to pivot toward monetary easing later this year, especially if core inflation and wage growth also continue to moderate. However, services inflation and housing costs remain key watch points.

The UK House Price Index (YoY) rose by 5.4% in February, exceeding both the expected 5.1% and the previous month’s 4.9% growth. This marks a continued recovery in the housing market, likely driven by:

• Easing mortgage rates.
• Improved buyer sentiment.
• Expectations of future Bank of England rate cuts.

The data suggests growing resilience in the housing sector, despite broader economic uncertainties. A strong housing market may complicate the BoE's path to easing if it fuels inflation concerns, especially through the shelter component of core CPI.

UK inflation showed modest signs of cooling in March:

• Core CPI (YoY) eased to 3.4%, in line with expectations and slightly below February's 3.5%.
• Headline CPI (YoY) dropped to 2.6%, just under the 2.7% forecast and down from 2.8% the previous month.
• On a monthly basis, CPI rose 0.3%, below the expected 0.4%, while Core CPI MoM was steady at 0.5%.

The data suggests disinflationary momentum is continuing, bringing overall inflation closer to the Bank of England's 2% target. This could strengthen the case for a potential rate cut in the coming months, especially amid signs of softening economic activity and stable wage growth. Markets may now begin to price in earlier monetary easing if this trend persists.

The UK labor market remained relatively strong in February, with employment increasing by 206,000 in the three months to February, outperforming the previous gain of 144,000. The unemployment rate held steady at 4.4%, in line with expectations. However, wage growth showed slight moderation, with average earnings excluding bonuses rising by 5.9%—just below the forecasted 6.0%—while total earnings including bonuses increased by 5.6%, matching the previous reading. Meanwhile, the claimant count rose by 18,700 in March, significantly lower than the expected 30,300, indicating a still-robust jobs market despite signs of softening momentum.

The British Retail Consortium (BRC) Retail Sales Monitor showed a 0.9% year-on-year increase in March, matching the growth seen in the previous month but coming in slightly above the expected 0.7%. While the pace of retail growth remains modest, the figure reflects a degree of resilience in consumer spending despite persistent cost-of-living pressures and elevated interest rates. Retailers continue to face challenges from subdued demand and economic uncertainty.

UK construction output posted a solid performance in February, increasing by 0.4% month-on-month, exceeding expectations of a 0.2% rise and recovering from the previous month's 0.3% decline. On a year-on-year basis, construction output grew by 1.6%, matching the previous month's growth and reflecting a steady expansion in the sector. This positive momentum in construction output could help drive further economic stability in the UK, particularly with ongoing demand for infrastructure and housing projects.

UK manufacturing production saw a notable recovery in February, rising by 2.2% month-on-month, surpassing expectations of a modest 0.2% gain and reversing the 1.0% decline in January. On a year-on-year basis, manufacturing output increased by 0.3%, outperforming the anticipated 2.4% drop and providing a positive outlook for the sector. This rebound in manufacturing activity suggests that the UK's industrial base is gaining strength, which could provide further support to the economy amidst ongoing challenges.

UK industrial production rebounded strongly in February, rising by 1.5% on a monthly basis—well above expectations of a 0.1% increase and reversing January’s 0.5% decline. On an annual basis, output edged up 0.1%, beating forecasts of a 2.3% contraction. The surprising rebound suggests a healthier-than-expected industrial sector, potentially contributing to the stronger GDP figures reported for the same period and offering some support to the British pound amid ongoing economic uncertainties.

The UK’s trade deficit widened more than expected in February, with the overall trade balance reaching -£20.81 billion, significantly higher than the forecast of -£17.30 billion and up from -£18.22 billion the previous month. The non-EU trade deficit also expanded to -£8.58 billion from -£7.37 billion. The growing gap highlights persistent trade imbalances and reflects increased import costs or weaker export performance, adding pressure on the current account and potentially limiting the recent momentum seen in GDP growth.

The UK economy showed stronger-than-expected growth in February, with GDP rising 0.5% on the month, well above the 0.1% forecast, and up from 0.0% previously. On a yearly basis, GDP expanded by 1.4%, beating expectations of 0.9%, while the 3-month average growth rate climbed to 0.6% from 0.3%. The better performance, likely supported by gains in the services and construction sectors, offers a boost to the British Pound, especially amid weaker data from other major economies. However, questions remain about the sustainability of this momentum as high interest rates and global trade risks persist.

The average UK mortgage rate edged down to 7.23% in March from 7.33% in the previous month, offering a small relief to borrowers amid persistently high borrowing costs.