United Kingdom: The economy flatlines in August, data for June and July revised upward
October 10, 2018
According to monthly GDP data released by the Office for National Statistics (ONS), economic activity was unchanged in August over the prior month in seasonally-adjusted terms, undershooting market analysts’ expectations of 0.1% growth. However, the expansion for June-August was larger than expected at 0.7%, thanks to upward revisions to GDP data for June and July. Looking at a sector-by-sector picture, in August the services sector was stagnant, while industrial production expanded and construction and agriculture declined.
Taking GDP data for July and August together suggests a robust GDP outturn in Q3, with the economy buoyed by warm weather boosting consumer spending. However, James Smith, Developed Markets Economist at ING, cautions that headwinds are likely to build in the final quarter: “Sunny weather has given UK growth a much-needed boost over the summer, but the combination of Brexit uncertainty and consumer caution suggests the economy faces a challenging autumn and winter”.
UK GDP Forecast
The Central Bank expects the economy to expand 1.4% in 2018 and 1.8% in 2019. FocusEconomics panelists are less optimistic and expect GDP to expand 1.3% in 2018 and 1.4% in 2019.
Author: Oliver Reynolds, Economist