UK economy grows 0.1% in August, defying contraction forecast

Industrial production drives monthly expansion as services stall and construction declines

The UK economy grew 0.1% month-on-month in August, beating market expectations of a 0.1% contraction, according to Office for National Statistics data released Thursday. Growth slowed from an unrevised 0.4% in July, while June's expansion was revised up to 0.4% from 0.3%. Production output rose 0.8% in August, driving the monthly increase in gross domestic product (GDP), while services showed no growth and construction output fell 0.2%. Manufacturing expanded 1.2%, with nine of its 13 subsectors recording growth. Pharmaceutical production rose 5.1%, providing the largest contribution to the manufacturing increase, followed by transport equipment, which grew 1.8%. Mining and quarrying output increased 1.4%, while electricity and gas supply edged up 0.1%. Within services, gains in wholesale and retail trade and professional, scientific and technical activities were offset by weakness elsewhere, including administrative and support services. Consumer-facing services declined 0.3%, following a 0.1% fall in July. Sports, amusement and recreation activities dropped 7.1%, while food and beverage services fell 2.7%. Construction output contracted for a fourth consecutive month, with new work falling 0.7%. Private housing new work declined 1.9%, contributing most to the monthly decrease.   3-month growth accelerates GDP expanded 0.7% in the three months to August compared with the preceding three months, accelerating from 0.5% growth in the three months to July. This marked the eighth consecutive increase on a rolling three-month basis. Services grew 0.9%, providing the only positive contribution among the three main sectors. Production fell 0.2%, while construction declined 1%. Professional, scientific and technical activities, alongside information and communication, supported services growth, with both subsectors expanding 2.8%. The economy grew 2.1% compared with August last year. Over the three months to August, GDP was 1.8% higher than a year earlier.