After five months of stagnation, the UK economy returned to growth in August, increasing by 0.1%. All of this data is sourced from ONS. This increase represents a slight recovery following a contraction of 0.1% in July. The ONS has subsequently adjusted that figure down from no growth at all. Today’s figures reflect an improvement in the overall economic performance over the last quarter. This provides some promise as we head into what appears to be more tough economic times.
According to Liz McKeown, director of statistics at the ONS, the services sector played a key role in fuelling this growth. The depth of its contribution was profound and meaningful. Production and investment rose slightly in GDP growth in the most recent three-month period. Services growth remained solid, but there was larger negative take from production than before,” she said. That stability in the services sector is significant. In addition, it is one of the first places that reflects the health of the national economy.
Rentals and leasing in business, the ONS discovered, stands buoyantly firm on its own two feet. Further, it is healthcare services that have been a major force behind this overall growth. This was more than offset by a general weakness among consumer-facing services, along with the biggest drop from wholesalers in four years. Those surges and drops are characteristic of the volatility that monthly growth numbers can have.
Beyond these insights, McKeown made another important point—that context is critical in telling the story of economic data. The monthly growth rates are susceptible to large revisions and must be considered in the context of a larger economic picture.
The new data release arrives during debates over fiscal policy and the state of our public finances. Shadow Chancellor Rachel Reeves reiterated the importance of fiscal responsibility when introducing tax or spending commitments, to be careful not to tip the UK into instability. “Looking at further measures on tax and spending, to make sure that the public finances always add up,” she remarked.