The transport and storage sector’s strong performance is playing a key role in helping the UK come out of recession, according to the latest figures from the Office for National Statistics (ONS).
The report has revealed that monthly real gross domestic product (GDP) grew by 0.4% in March 2024, up from 0.2% in February 2024 and 0.3% in January.
On a quarterly basis, GDP grew 0.6% in the three months to March 2024, compared with the three months to December 2023.
This boost in GDP has been driven by “widespread growth” across the services sector, particularly in transport and storage, which saw a 3.7% increase in output in the period, the report reveals.
It added that this growth was particularly noticeable in February this year, when land transport services, excluding rail transport, saw a 6.4% growth, helping it deliver its highest quarterly growth rate since Q3 2020.
However the report also noted that the reclassification of a company into the sector, which had previously been allocated in the wholesale trade excluding motor vehicles and motorcycles industry, also contributed to the sector’s strong growth.
The report does did not identify the reclassified company.
The CBI welcomed the improved figures but warned the recovery could falter. Ben Jones, CBI lead economist, said: “Back-to-back increases in output over the first months of this year suggest the UK is now on the road to recovery.
”With falling inflation boosting households’ spending power, as well as opening the way for a reduction in interest rates in the months ahead, the economy should be able to sustain some momentum through the year.
“But a consumer-led recovery could prove short-lived without more determined action to tackle the long-standing problem of weak productivity growth, which ultimately sets the UK’s economic speed limit.
“Firms want to see action that could help support investment and cut costs, which includes extending full expensing to leased and rented assets, and a business tax roadmap to give firms the certainty and confidence they need to plan ahead and invest in a vibrant UK economy.”
Dr. Roger Barker, director of policy at the Institute of Directors, said that whilst the quarterly and monthly GDP figures were encouraging it would be premature to call a full blown recovery.
He added: ”Although there are welcome signs of green shoots, any recovery is still at an early stage and it is likely to be fragile. As a result, there is still a compelling case for the Bank of England to cut interest rates at its next meeting on 20 June.”
David Jinks, Parcelhero head of consumer research, hailed the performance of the transport and storage sector for its part in helping to bring the UK out of recession.
He said: ”Some sections of the transport & storage sector saw their highest quarterly growth rate since Quarter 3, 2020.
‘It’s extremely encouraging to see Britain is now coming out of recession; it’s good news for both businesses and home owners.”
However, he added: ”Before we all breathe a sigh of relief that the worst of our economic woes is behind us, the Q1 figures aren’t all good news. They also show a 3.4% fall in goods exports, leading to an overall exports decline of 1%, when the UK’s service exports are included.
”Nonetheless, it is encouraging to see the transport & storage sector is helping to lead economic recovery. Key to this sector is the domestic and global parcels market.”
Jinks added that the impact of new e-commerce, TMS and automated shipping technologies will drive continued growth.
”That means the global parcels market is likely to soar from $482.9bn (£378.4bn) in 2023 to $648bn (£507bn) by 2030, and the UK market from £16.4bn ($20.97bn) to £25bn ($32bn),” he added.
Turning to the international and domestic courier and delivery services markets, Jinks said that globally, the market has grown 2.5% from the year before, with Parcelhero predicting compound annual growth rate (CAGR) of 4.31% by 2030.
He added: ”Similarly, the UK’s courier, express and parcel market value reached approximately $20.97bn (£16.4bn) in 2023, according to Expert Market Research (EMR), which also predicts the UK market to rise to $38.66bn (£30bn) by 2032, at a CAGR of 7%. That’s broadly in line with our forecast of 6.22% CAGR growth to $32bn (£25bn) by 2030.”
Jinks said that the growth of new tracking and end-to-end shipping solutions is set to fuel the rapid growth in the size of the global TMS market.
”In 2023, this was worth around $13.5bn (£10.58bn) but by 2028 it is expected to reach $33.3bn (£26bn), a growth of 19.7%, according to the latest independent research by MarketsandMarkets.com,” he explained.
