The UK economy returned to growth in July with a ‘weak’ 0.2% rise in GDP – business live | Business

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The UK economy grew by 0.2% in July

Newcomer: The UK economy returned to growth in July.

UK GDP rose 0.2% in July, the latest data from the Office for National Statistics shows, a smaller-than-expected increase.

That’s a welcome return to growth, after the economy contracted 0.6% in June as additional bank holidays to mark the Platinum Jubilee hit economic output.

But it could only be a temporary reprieve, as the cost-of-living crisis hits homes and businesses this fall and winter.

More details to follow….

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Economic growth has been uneven this year, as this graph of monthly GDP shows:

sept122022gdp2
UK GDP each month Photography: ONS

After growing 0.6% in January, the UK economy stagnated in February and then grew 0.1% in March.

April saw a 0.2% drop, before a 0.4% recovery in May, offset by June’s 0.6% drop, which meant the economy contracted slightly in the second quarter.

KPMG: Economy faces gloomy outlook after ‘weak’ recovery in July

The “weak 0.2% rebound in July” was fueled by GDP weakness in June due in part to the loss of working days from the Jubilee long weekend, it says. Yael Selfin, chief economist at KPMG UK:

More worryingly, GDP for July remains below the level seen in May, pointing to a general contraction during the first two months of the summer.

“This ties in with a gloomy outlook for the UK economy, which could experience another shallow recession from the end of this year, fueled by ongoing income constraints for households and a growing cost burden for businesses.

“While fiscal measures announced last week worth nearly £170bn may be enough to stave off a deeper economic downturn, they will be partly offset by tighter monetary policy from the Bank of England focused on combating high levels. of inflation”.

The UK economy is now 1.1% above its levels in February 2020, before the pandemic hit the economy.

Small rise in GDP in July: 0.2%. Mainly driven by a boost in services.

“Monthly GDP is now estimated to be 1.1% above its pre-coronavirus (COVID-19) levels (February 2020).” pic.twitter.com/bNOVp34JoC

— Kate Andrews (@KateAndrs) September 12, 2022

The UK economy stagnated during the last quarter

The general picture is that the British economy failed to grow during the last quarter, weighed down by economic headwinds.

GDP was flat in the three months to July compared to the previous three months, the ONS reports.

UK GDP until July 2022
UK GDP until July 2022 Photography: ONS

UK construction The sector also contracted again in July, with output falling 0.8%, after 1.4% in June 2022.

This was due to a drop in repair and maintenance work.

Manufacturing only expanded 0.1% in July.

And the overall manufacturing sector contracted again: 0.3% after a 0.9% drop in June 2022, due to a drop in output from electricity supply, gas, steam and air conditioning.

The ONS says that people may have reduced their electricity consumption after rising prices this year.

According to anecdotal evidence from the Department of Business, Energy and Industrial Strategy (BEIS), electricity demand was 2.3% lower than that observed in July 2021 (which may have been influenced by higher than usual temperatures).

Anecdotal evidence suggests that there may be some signs of changes in consumer behavior and lower demand in response to rising prices. This is further shown in our recent Consumer Price Inflation, UK: July 2022 Bulletin where electricity prices increased 54% in the 12 months to July 2022.

British service industry led the recovery in July, growing 0.4%

The information and communication sector grew by 1.5% and was the one that contributed the most to the growth of services in July.

The UK economy grew by 0.2% in July

Newcomer: The UK economy returned to growth in July.

UK GDP rose 0.2% in July, the latest data from the Office for National Statistics shows, a smaller-than-expected increase.

That’s a welcome return to growth, after the economy contracted 0.6% in June as additional bank holidays to mark the Platinum Jubilee hit economic output.

But it could only be a temporary reprieve, as the cost-of-living crisis hits homes and businesses this fall and winter.

More details to follow….

The economy could feel chills from national mourning

Economists fear that next week’s bank holiday for the Queen’s state funeral, and the impact of national mourning could push the economy closer to recession.

Growth could be weaker than normal in August as Monday the 19th will not be a normal business day. That could lead to lost trade in restaurants, bars and concert halls as people pay tribute to Queen Elizabeth.

Simon Frenchchief economist in the city corridor Panmure Gordonit said single bank holidays in 2002, 2012 and earlier this year had cut economic output by at least £2bn.

French told the Sunday Times:

“There are few parallels for this moment and that makes forecasting particularly difficult.

We may not be talking simply about an additional bank holiday. There could be a prolonged period of national mourning.”

Some companies, including selfridges Y Freedomdecided to close its stores last Friday as a sign of respect.

Government guidance published last week encourages businesses to consider canceling or postponing events during the mourning period, especially the day of the state funeral.

Events, including the TUC Congress, have been postponed, as have some sporting events, including football matches from last weekend.

Introduction: UK July GDP report in the spotlight

Good morning and welcome to our ongoing coverage of business, the world economy and the financial markets.

It’s a critical week for data showing the health of the British economy and we start by finding out how the UK performed in July.

The latest UK GDP report, due at 7am BST, is expected to show a return to growth, after the economy contracted 0.1% in the second quarter of the year.

Some economists forecast that the economy grew 0.4% in July, after economic activity in June was hit by the Platinum Jubilee, which meant two fewer business days that month.

UK GDP until April-June 2022

alvin tan of RBC Capital Markets predicts that the economy grew by about 0.3% in July:

The drop in UK June GDP of 0.6% m/m since the extended Jubilee bank holiday was considerably smaller than expected with some sectors, notably recreation and hospitality, actually benefiting from the weekend festive.

To a large extent, the impact of events such as the additional June bank holiday tends to be in the timing of activity with most of it recovered in the aftermath. Consequently, we expect UK July GDP to rebound by 0.3% m/m. We also expect UK Q3 GDP growth of 0.2%.

Data to be released later this week will show the high cost of living faced by households like my colleague zoé Wood Explain:

City economists forecast a further spike in inflation to 10.2% in August when official figures are released on Wednesday, as rising weekly grocery prices and sky-high energy bills put financial pressure on consumers. distressed homes.

This would mark a modest rebound from July’s reading of 10.1%, which was the first time the consumer price index had risen above 10% since the early 1980s.

We’ll also get the latest UK Unemployment data tomorrow and Retail Sales figures on Friday, which may show a drop in spending as stretched consumers cut back.

The agenda

  • 7am BST: UK GDP report for July

  • 7am BST: UK trade balance for July

  • 9am BST: European Central Bank survey of monetary analysts

  • 11am BST: NIESR estimate of UK GDP in August

  • 1 pm BST: India’s industrial production and inflation data



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