United Kingdom: Economy perks up in July, allaying recession fears
September 9, 2019
According to monthly GDP data released by the Office for National Statistics (ONS), economic activity rose 0.3% in July over the previous month in seasonally-adjusted terms, up from June’s flat reading and beating market expectations of 0.1% growth. July’s reading was driven by expansions in the services and manufacturing sectors. Looking at quarterly data, which helps smooth month-to-month volatility, the economy flatlined in April–July, improving from the 0.2% contraction observed in the April–June period.
Over the third quarter as a whole, the economy should benefit from stronger car production after shutdowns in Q2 and some stockpiling by firms ahead of the 31 October Brexit deadline. Notwithstanding these temporary factors, underlying momentum will likely remain soft due to subdued fixed investment and exports, and the outcome of Brexit will have a key bearing on activity in the fourth quarter and beyond.
Author: Oliver Reynolds, Economist