The data showed Britain's huge services sector grew by a slightly stronger than expected 0.4% in August from July while manufacturing and construction shrank by 0.8% and 0.5%. While July's output was revised down, monthly growth in June was revised up by 0.2 percentage points to 0.7%. The ONS said the economy would need to grow by 0.2% in September to avoid contracting in the third quarter, excluding other factors. Nonetheless, August's growth reduces the possibility of a recession starting as early as the July-September period. The data showed consumer-facing services remained more than 4% below their level before the pandemic, with the biggest drag being the home rentals sector which has been hit by rising interest rates and other cost increases. "Our research is clear about the issues UK firms are facing - three years of economic shocks, high inflation and interest rates, skills shortages, and trade barriers with the European Union." "The UK economy is holding up but remains in a precarious state," said David Bharier, head of research at the British Chambers of Commerce. The signs of a slowdown prompted the BoE to halt its run of interest rate increases last month. The International Monetary Fund this week forecast Britain would be the slowest-growing Group of Seven nation in 2024. The last time the economy shrank by more than that in a month was in June 2022, impacted by a one-off holiday to mark the late Queen Elizabeth's 70 years on the throne. Official data showed the economy expanded by 0.2% in August from July, in line with a Reuters poll of economists.īut July's slide, compounded by rainy weather and strikes by teachers and other workers, was revised to 0.6% from an initial estimate of a 0.5% decline. LONDON, Oct 12 (Reuters) - Britain's economy partially recovered in August after a sharp drop in July but the bigger picture remained one of only sluggish growth after last year's surge in inflation and 14 back-to-back interest rate hikes by the Bank of England. (Adds graphic, Hunt comments in paragraphs 16-18)
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