Brains and brawn underpin good month as the UK economy grows – London Business News | Londonlovesbusiness.com

UK GDP grew 0.2% month-on-month in August, following no growth in July, this reflects growth across all three key sectors.

Services output grew 0.1% month-on-month as construction output grew 0.4% month-on-month and production grew 0.5% month-on-month.

GDP had been expected to rise 0.2% month-on-month (Trading Economics).

The Chancellor Rachel Reeves said the figures were “welcome news” and the economic growth is the “number one priority of this Government so we can fix the NHS, rebuild Britain, and make working people better off.”

“While change will not happen overnight, we are not wasting any time on delivering on the promise of change,” she added.

ONS director of economic statistics Liz McKeown said, “All main sectors of the economy grew in August, but the broader picture is one of slowing growth in recent months, compared to the first half of the year.

“In August, accountancy, retail and many manufacturers had strong months while construction also recovered from July’s contraction.

“These were partially offset by falls in wholesaling and oil extraction.”

Nicholas Hyett, Investment Manager, Wealth Club said, “August’s GDP growth was broad based, with British brains and British brawn both contributing to healthy growth.

In the crucial Services sector, professional, scientific and technical activities continues to be the key driver of growth  – with auditors, lawyers and scientific researchers all reporting a busy month.

In Production manufacturing enjoyed a rebound over the summer, particularly in transport, while infrastructure activity drove a strong result in Construction.

This is all welcome news for the Treasury ahead of the Budget which is expected to see taxes rises, potentially slowing economic activity. It does raise a conundrum for the Bank of England though. The Bank had been eyeing up further interest rate cuts, but the economy doesn’t look like it’s crying out for more monetary support and with inflation expected to accelerate again into Christmas, rate setters might be thinking it makes sense to sit on their hands a little while longer.”

Luke Bartholomew, deputy chief economist at asset manager Abrdn said, “After a strong performance over the first half of the year, the economy was always likely to slow somewhat over the second half.

“But the worry is that speculation about the upcoming Budget will cause an even more pronounced slowdown.

“These figures confirm a reassuring rally in output, as easing inflation and better weather helped return the economy to growth by reviving activity in key sectors, including retail and manufacturing.