GDP grows by 0.2% in August, official data shows

The UK’s economy grew slightly in August, with the country’s service sector leading the way, the Office for National Statistics has said.

Gross domestic product (GDP) increased by 0.2% over the month, in line with what economists had expected.

“Our initial estimate suggests GDP grew a little in August, led by strong growth in services which was partially offset by falls in manufacturing and construction,” ONS director of economic statistics Darren Morgan said.

“Within services, education returned to normal levels, while computer programmers and engineers both had strong months.

“Across the last three months as a whole the economy has grown modestly, led by car manufacturing and sales, and construction.”

The data showed some of the biggest gains for architects and engineers, with their sector growing by 4.7%. This helped the services sector grow by 0.4% overall in August, helping to grow GDP.

The education sector, which had shrunk 1.7% due in part to strikes in July, rose by 1.6% in August, the ONS said.

Not all parts of the service sector had a good month, however. The arts, entertainment and recreation sector shrank by 7.4%.

The ONS also said it had downgraded July’s performance from a fall of 0.5% to a 0.6% drop.

The revision was in part due to the performance of consumer-facing service businesses. The output of companies had previously been thought to have been flat in July, but revised estimates show that the sector contracted by 0.2%.

It makes July’s fall the largest since June last year, when the Platinum Jubilee bank holiday calendar led to a fairly large drop in GDP.

It means that the UK’s economy is now 2.1% larger than it was in February 2020, before the Covid-19 pandemic hit.

Chancellor Jeremy Hunt said: “The UK has grown faster than France and Germany since the pandemic and today’s data shows the economy is more resilient than expected.

“While this is a good sign, we still need to tackle inflation so we can unlock sustainable growth.”

The news comes two days after the International Monetary Fund forecast the UK would have the weakest economic growth in the G7 next year due to pressure from higher interest rates.

It also said UK GDP is expected to rise 0.5% this year, up from a previous 0.4% forecast. That would be the second weakest performance in the G7, after Germany.

Labour shadow chancellor Rachel Reeves said: “Under the Conservatives, Britain’s economy remains trapped in a low growth, high tax cycle that is leaving working people worse off.

“Labour will get our country building again so we can boost growth, make working people better off and get Britain’s future back.”