The UK economy expanded by 0.1% in August, confounding a consensus of economists who had expected a contraction after July's strong showing. The Office for National Statistics data released Thursday shows the economy has now grown for nine consecutive three-month periods, extending a run of resilience that has repeatedly surprised forecasters.
Expectations for August were almost uniformly negative. Pantheon Macroeconomics predicted a 0.3% decline, RSM UK forecast a 0.1% drop, and the broader consensus centred on a 0.1% contraction. Deutsche Bank's nowcast saw the month coming in flat. The rationale was straightforward: July's 0.4% monthly surge — driven by a 0.6% jump in services, particularly computer programming and AI-related spending — looked ripe for a payback.
That payback did not fully materialise. While real-time indicators for August showed retail footfall and direct debit spending dipping slightly, and fuel prices rising after the Ofgem price cap increase, the headline GDP figure held positive ground. The three-month growth rate to July stood at 0.4%, marking the eighth straight rolling quarter of expansion, with services growing 0.6% over that window while production and construction each fell 0.5%.