The UK economic system grew by 0.2% in August – consistent with expectations, in response to the Office for National Statistics.
“Our initial estimate suggests GDP grew a little in August, led by strong growth in services which was partially offset by falls in manufacturing and construction,” ONS director of financial statistics Darren Morgan mentioned.
He added that the economic system has additionally grown “modestly” over the previous three months – largely led by automobile manufacturing and gross sales in addition to the development sector.
But it wasn’t all excellent news from the Office for National Statistics, which introduced that it has revised July’s gross home product (GDP) additional downwards.
Early official figures had already advised that strikes and a summer season washout led to a worse-than-expected contraction of 0.5% – however the ONS now believes July’s GDP really fell by 0.6%.
That’s the most important month-on-month contraction since June 2022, when there was a one-off financial institution vacation for the late Queen’s Platinum Jubilee.
Chancellor Jeremy Hunt mentioned: “The UK has grown faster than France and Germany since the pandemic and today’s data shows the economy is more resilient than expected. While this is a good sign, we still need to tackle inflation so we can unlock sustainable growth.”
Pantheon Macroeconomics says August’s GDP report ought to “becalm fears that the economy is on the cusp of recession” – with industrial motion having much less of an influence on the economic system through the month.
Overall, its analysts consider UK financial exercise is on a “flat-to-slightly-rising trend” – and such modest development should not stand in the way in which of the Bank of England maintaining rates of interest held at 5.25% in future conferences.
At current, buyers consider there’s lower than a 25% probability that the Bank will resume fee hikes when the Monetary Policy Committee subsequent meets in November.
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Reacting to the newest figures, Pantheon mentioned it’s “touch and go” as as to whether GDP dropped marginally within the third quarter of this 12 months, and argued {that a} recession “remains unlikely”.
Striking an optimistic notice, it estimated that households will see their actual disposable revenue rise over the approaching quarters – “albeit sluggishly” – as a result of costs at the moment are rising much less rapidly than wages.
However, the British Chambers of Commerce has warned that the UK economic system “remains in a precarious position”.
The BCC’s head of analysis David Bharier mentioned: “Our research is clear about the issues UK firms are facing – three years of economic shocks, high inflation and interest rates, skills shortages, and trade barriers with the European Union.”
It was a blended bag within the providers sector. Architects and engineers have been among the many large winners, with their sector rising by 4.7% over the course of August.
The training sector rose by 1.6% through the month, bouncing again from a 1.7% contraction in July that was partially brought on by strikes.
But one of many greatest losers within the providers sector was arts, leisure and recreation, which shrank by 7.4%.
On a month-to-month foundation, GDP is now 2.1% larger than it was earlier than the pandemic.
Source: information.sky.com”