Economy expands marginally in August

GDP reading: GDP increased 0.1% in seasonally adjusted month-on-month terms in August, following a 0.1% drop in the prior month and in line with market expectations. On a rolling quarter basis, GDP was up 0.3% in August, following 0.2% growth in the previous rolling quarter.

Drivers: In August, higher industrial output just outweighed a fall in construction activity and a stagnant services sector.

Panelist insight: On the latest data, ING’s James Smith said: “We’re always reticent to read too much into these volatile monthly figures, which have been even more bumpy over recent months, given the frontloading ahead of tariffs and stamp duty changes earlier in the year. Generally, though, the economy is performing a little better than expected a few months ago […] Some of that strength can be traced back to the material rise in government spending we've seen this year. Real-terms departmental budgets are rising by 4%, having risen by almost 3% in the last fiscal year. […] That tailwind is likely to diminish next year.”

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