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Financial News: UK Economy Expands In July

UK Economy Expands In July

09/12/2022 - 07:43:00 (RTTNews)

(RTTNews) - The UK economy expanded in July underpinned by the rebound in the services, particularly consumer-facing services, data published by the Office for National Statistics showed Monday.

Gross domestic product grew 0.2 percent on a monthly basis in July, in contrast to a fall of 0.6 percent in June.

However, the rebound was slower than the 0.3 percent expansion forecast by economists. The contraction in June was caused by an extra bank holiday in recognition of the Queen's Jubilee.

GDP was flat in the three months to July compared with the previous three months.

On the production side, services output expanded 0.4 percent in July, reversing a 0.5 percent drop in June. The largest contributor to the services growth was information and communication, which grew 1.5 percent.

Industrial production logged a decline of 0.3 percent after a 0.9 percent drop in June. Economists had forecast a monthly growth of 0.4 percent. This was mainly because of a 3.4 percent decrease in electricity, gas, steam and air conditioning supply.

Manufacturing rose only 0.1 percent, with a mixed performance across the sub-sectors. Manufacturing was forecast to climb 0.4 percent in July.

At the same time, construction declined 0.8 percent, after a fall of 1.4 percent a month ago, data showed. The decline in construction output came solely from repair and maintenance, which fell 2.6 percent.

The announcement of an energy price guarantee by Prime Minister Liz Truss should materially reduce the depth of an economic downturn this winter, even if it does not totally rule out the risk of a technical recession, ING economist James Smith, said. For now, it looks like third-quarter growth will be largely flat, and the fourth quarter slightly negative, the economist observed.

The economy is set to shrink 0.1 percent in the third quarter, with growth slowing as inflation maintains its drag on consumer demand and confidence, Stephen Millard, Deputy Director for Macroeconomic Modelling and Forecasting at the National Institute of Economic and Social Research said.

Another report from the ONS showed that the visible trade deficit narrowed to GBP 19.36 billion in July from GBP 22.85 billion in June. Exports of goods advanced 7.2 percent from June, while imports fell 2.3 percent.

The trade in services showed a surplus of GBP 11.57 billion compared to June's GBP 11.46 billion surplus. As a result, the total trade deficit fell to GBP 7.79 billion from GBP 11.38 billion.

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