Overview
- The Office for National Statistics reported on Thursday that GDP rose 0.1% in August, beating economists who had expected a small contraction.
- Growth was driven by production, which rose 0.8% for the month, with manufacturing up 1.2% thanks in part to pharmaceutical output, while services were flat and construction fell.
- The ONS revised June’s figure up to 0.4% and said the economy expanded 0.7% over the three months to August, reflecting strong activity in June and July followed by slower growth in August.
- The print narrows the Chancellor’s fiscal room by strengthening near-term growth but analysts warn that rising wholesale energy prices, higher long-term interest rates and persistent inflation could slow activity later in the year and complicate Budget choices.
- Markets and policymakers will watch the Office for Budget Responsibility’s forecasts, the October 28 Budget and Bank of England rate decisions for signals on borrowing costs, public spending and household pressure in coming months.