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%.

Investment director at AJ Bell, Lindsay James, said the latest data has "surprised" many, following fears that momentum in the UK had faded.

She 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.

"Meanwhile, the UK is braced for a new prime minister, and markets will be watching closely for any signals on Andy Burnham’s plans for spending, taxation and borrowing. What’s more, ongoing speculation over who will take the role of Chancellor is adding another layer of uncertainty for businesses and risks weighing further on confidence.

"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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