UK Economy Logs Better-Than-Expected Growth

(RTTNews) - The UK economy expanded marginally in August defying expectations of a moderate contraction, as growth in industrial production offset the fall in construction. Gross domestic product grew 0.1 percent in August from the last month, the Office for National Statistics said Thursday. Although this was weaker than the 0.4 percent growth seen in July, the rate came in contrast to the expected fall of 0.1 percent. Data showed that economic growth was underpinned by industrial production, as services output registered no growth and construction shrank 0.2 percent.

Industrial production climbed at a faster pace of 0.8 percent on a monthly basis, after rising 0.3 percent in July. The increase in manufacturing output rose to 1.2 percent from 1.0 percent.

Year-on-year, industrial production growth doubled to 1.6 percent from 0.8 percent in July. At the same time, manufacturing output rose 3.0 percent after rising 2.2 percent.

Compared with the same month a year ago, GDP advanced 2.1 percent higher in August, marking the strongest expansion in four years.

In the three months to August, real GDP grew 0.7 percent, following growth of 0.5 percent in the three months to July.

Earlier this week, the International Monetary Fund upgraded its UK growth projection for this year to 1.3 percent from 1.0 percent but the 2027 outlook was lowered to 1.2 percent from 1.3 percent.

The economy has generally performed well so far this year, Confederation of British Industry Senior Lead Economist Ben Jones said.

However, amid rising inflation and tightening financial conditions, maintaining that momentum does look difficult, with a more subdued end to 2026 in prospect, Jones observed.

Another report from ONS today showed that the visible trade deficit narrowed to GBP 18.0 billion from GBP 19.3 billion in July as imports declined 2.4 percent. Exports of goods dropped only 0.1 percent.

The overall trade gap, including goods and services, fell to GBP 920 million from GBP 2.3 billion in July.