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United Kingdom GDP July 2023

United Kingdom: Economic activity contracts at sharpest rate since December 2022 in July

GDP dropped 0.5% month-on-month in seasonally-adjusted terms in July (June: +0.5% mom). The result marked the worst reading since December 2022, and was more than twice as steep a contraction as markets had expected. Services, manufacturing and construction all shrank in July. On a rolling quarterly basis, GDP increased 0.2% in May–July, matching April–June’s expansion. Industrial action in the health, education and transport sectors, together with a tough base effect following June’s sharp growth, were partly to blame for July’s weak GDP reading.

It should be noted that monthly GDP data has been highly volatile in recent months, making it difficult to glean a clear picture of how the economy is doing. For now, our panelists forecast a marginal quarter-on-quarter GDP expansion in Q3 before no growth in Q4.

On the data, ING’s James Smith said:

“Cutting through the noise, the economy seems to be still growing, albeit fractionally. The change in activity over the past three months relative to the three months before is still slightly positive. We think the economy is likely to more or less flatline over coming quarters – and a mild recession can’t be ruled out.”

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