- July GDP Revised Down
- August Meets Expectations
- Mixed Services Sector Performance
Meeting predictions, the UK economy increased 0.2% in August after the Office for National Statistics raised July’s GDP drop from 0.5% to 0.6%.
Darren Morgan, ONS’s director of economic statistics, stated, “Our preliminary estimate shows a marginal expansion in August, with robust growth in the services sector offsetting manufacturing and construction declines.”
He added that the economy has grown modestly over the past three months, with construction and automobile manufacturing and sales driving the expansion.
However, the ONS’s announcement about the further reduction of July’s GDP wasn’t entirely positive. Initial figures suggested a 0.5% contraction due to strikes and summer rainfall, worse than anticipated. The revised figure is a 0.6% contraction.
This represents the most significant month-to-month decline since June 2022 when the late Queen’s Platinum Jubilee was observed with a singular bank holiday.
“Don’t miss out! Grab your free shares of Webull UK today!”
The UK has surpassed France and Germany since the outbreak, demonstrating unexpected economic resilience, said Chancellor Jeremy Hunt.
Inflation must be addressed for sustained growth.
Pantheon Macroeconomics suggests that August’s GDP estimate eases concerns about a recession, given reduced industrial action’s impact during the month. They believe the UK’s economic activity follows a “flat-to-slightly-rising trend.”
They anticipate the Bank of England maintaining interest rates at 5.25% in upcoming meetings. Investor sentiment suggests a probability of the Bank resuming rate increases during the Monetary Policy Committee’s November meeting below 25%.
Pantheon considers a slight Q3 GDP decline as “touch and go” with a recession “remaining improbable.” The report forecasts sluggish growth in real disposable income for households due to wage growth surpassing price growth.
Nonetheless, the British Chambers of Commerce warns that the UK’s economy “remains in a precarious position.”
The services sector’s performance varied, with engineers and architects enjoying a 4.7% expansion in August. The education sector rebounded with a 1.6% increase, partially attributed to strikes, after a 1.7% contraction in July. The arts, entertainment, and recreation sector suffered a 7.4% decline.
Monthly GDP is now 2.1% higher than pre-pandemic levels.
