UK Economy Expands In August
13 October 2021 - 6:31PM
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Underpinned by services and production output, the UK economy
expanded in August after contracting for the first time in six
months in July, the Office for National Statistics reported
Wednesday.
Gross domestic product grew 0.4 percent on month, but slightly
slower than the economists' forecast of +0.5 percent.
The ONS said GDP growth for July has been revised from 0.1
percent growth to a 0.1 percent fall, mainly because of downwardly
revised data for the manufacture of motor vehicles, oil and gas,
and improvements to how health output is measured.
GDP remained 0.8 percent below its pre-pandemic level in
August.
On the production-side, services output grew 0.3 percent in
August. This follows a fall of 0.1 percent in July. Accommodation
and food service activities, and arts, entertainment and recreation
contributed most positively to services growth.
After gaining 0.3 percent in July, production output increased
0.8 percent, mainly because of the continued increase in the
extraction of crude petroleum and natural gas. The manufacturing
sector expanded 0.5 percent, following a downwardly revised 0.6
percent fall in July.
Meanwhile, construction contracted again, with output down by
0.2 percent.
The recent broadening in shortages and the fuel crisis may mean
that growth has come to a near-standstill since August, Paul Dales,
an economist at Capital Economics, said.
In the third quarter as a whole, GDP may have risen by around
1.4 percent sequentially, the economist said. That would be weaker
than the 2.1 percent rise the Bank of England expected in
September.
While the chances of an interest rate hike this year have
recently risen, a weaker activity outlook means it is not a done
deal, Dales added.
Another report from the ONS showed that the visible trade
deficit widened to GBP 14.92 billion in August from GBP 14.09
billion in July.
The trade in services showed a surplus of GBP 11.2 billion
versus GBP 11.14 billion in July. As a result, the total trade
balance registered a deficit of GBP 3.7 billion, bigger than July's
GBP 2.94 billion shortfall.
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