UK economy returned to modest growth in August

Monthly GDP estimates from the Office of National Statistics (ONS) have revealed the UK economy grew 0.2% in August 2024.

The ONS estimates follow 0% growth in economy in the previous month, and mean the overall economy grew 0.2% across the three months from June to August. Services output grew by 0.1% in August, the same rate as the previous month, while production output grew by 0.5%, bouncing back from a 0.7% decline in July.

Service sector growth was largely driven by strong performance of the professional services sector: August saw 4.3% growth for accountancy services, 1.7% growth in legal activities and 2.8% growth in scientific research and development. Consumer-facing services, however, saw just 0.1% growth in August, highlighting the continued pinch on household spending from higher interest rates recent high inflation, although retail saw 1.2% growth, and the motor trade 1.0% growth respectively, offsetting declines and slower month-on-month growth in sectors such as hospitality, sports and personal service businesses.

Construction output also grew 0.4% in August, reversing the 0.4% decline seen the previous month, with the sector seeing the fastest growth (1.0%) over the quarter. Growth was largely driven by increases in new work, up 1.6% in August. While repair and maintenance output fell 1.0% month-on-month, over the quarter non-housing repair and maintenance was the best performing subsector with 5.6% growth from June to August.

UK GDP is estimated by the ONS to be 1.0% higher than this time last year, despite the mild recession at the end of 2023, but the UK economy has underperformed slightly on last year’s forecasts. The latest GDP estimates from the ONS come ahead of Chancellor Rachel Reeves’ first Budget since the Labour Party took office in July, where she is expected to announce measures to accelerate economic growth through investment in public services and infrastructure.