But gains in services sector spur growth over the three months to July
The UK economy was once again flat in July, with monthly gross domestic product (GDP) showing no growth for two consecutive months.
July’s GDP – the first reading under Prime Minister Keir Starmer’s new Labour government – fell short of the 0.2% growth forecast by economists.
Data released by the Office for National Statistics (ONS), however, revealed a 0.5% GDP growth in the three months to July compared with the three months to April 2024, with widespread growth in the services sector during the period.
Services output increased by 0.1% in July, recovering from a 0.1% decline in June, and grew by 0.6% over the three-month period.
The latest ONS figures on GDP also showed a 0.8% drop in production output in July, after rising 0.8% in the previous month. Over the three months to July, production fell by 0.1%.
Construction output declined by 0.4% in July, following a 0.5% rise in June. Despite the monthly drop, construction grew by 1.2% over the three-month period, its first positive quarterly growth since September 2023.
GDP growth was flat in July 2024 but grew 0.5% in the three months to July 2024.
— Office for National Statistics (ONS) (@ONS) September 11, 2024
In July services grew (+0.1%) but production (-0.8%) and construction (-0.4%) both fell.
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“The economy recorded no growth for the second month running, though longer term strength in the services sector meant there was growth over the last three months as a whole,” said Liz McKeown, ONS director of economic statistics.
“July’s monthly services growth was led by computer programmers and health, which recovered from strike action in June. These gains were partially offset by falls for advertising companies, architects and engineers. Manufacturing fell, overall, with a particularly poor month for car and machinery firms, while construction also declined.”
The latest GDP data arrives ahead of the Bank of England’s upcoming meeting to decide on interest rates next week.
Easing inflation enabled the central bank to reduce rates last month for the first time since 2020, lowering its main rate by 0.25 percentage points to 5%. Although inflation rose to 2.2% in July, surpassing the 2% target, further rate cuts are anticipated before the year concludes.
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