UK economy shows unexpected growth of 0.3% in March

LONDON, May ​14 (Reuters) - Britain's ⁠economy expanded unexpectedly in March ​to cap another strong first quarter, suggesting the economy was in ​slightly ‌better shape as the Iran war escalated than many feared, ⁠official data showed on Thursday.

Gross domestic product ⁠increased by 0.3% ​month-on-month in March, the Office for National Statistics (ONS) said, against expectations in a Reuters poll of economists for a 0.2% contraction.

The ​services ‌sector, construction output and manufacturing all grew strongly.

"Many will be unconvinced that this momentum can be sustained throughout this year," said Scott Gardner, investment strategist at J.P. Morgan ​Personal Investing.

"The risk is that the energy price ‌spike following the start of the Iran conflict will persist and lead to a ‌rebound in inflation."

Recent business surveys point to a rapid increase in cost pressures that is likely to weigh on corporate ​activity.

For the first quarter as a whole, the economy expanded ‌by 0.6% - marking the third year running of conspicuously strong growth in the first quarter.

The ONS on Thursday published a ⁠blog ⁠that acknowledged there may be post-pandemic shifts ‌in the timing of spending in the economy, and nudged down its ​readings ​for the first quarters of 2024 and 2025.

Finance minister ‌Rachel Reeves said the data showed she had the right economic plan. (Reporting by Andy Bruce and Suban Abdulla; Editing by Muvija M and Paul Sandle)