UK Economy Unexpectedly Grows in August

The UK economy expanded 0.1% month-on-month in August 2026, slowing from 0.4% growth in both July and June but defying market expectations of a 0.1% contraction. Growth was driven by a 0.8% increase in production output, led by manufacturing, which rose 1.2%, and mining and quarrying, up 1.4%. These gains were partly offset by a 1.2% decline in water supply, sewerage and waste management. Meanwhile, services output showed no growth, as a 2% rise in wholesale and retail trade was offset by a 1.7% fall in administrative and support services and a 2.7% decline in food and beverage services. Construction output fell 0.2%, marking its fourth consecutive monthly decline, as a 0.7% drop in new work outweighed a 0.4% increase in repair and maintenance. On an annual basis, GDP grew 2.1%, its strongest increase since October 2022, up from 1.8% in July and exceeding forecasts of 1.7% growth.

The UK economy expanded 0.4% month-on-month in July 2026, picking up from 0.3% growth in June and defying expectations of stagnation. This marked the strongest expansion since February, as all three main sectors contributed, with services output rising 0.4%, production 0.2% and construction 0.1%. Within services, the largest positive contribution came from administrative and support service activities, which rose 3.7%, driven by rental and leasing (7.9%), services to buildings and landscape (4%) and employment activities (2.5%). Information and communication output also increased 2.4%. These gains were partly offset by a 1% decline in wholesale and retail trade. Meanwhile, production growth was supported by a 0.9% rise in manufacturing, while construction growth came solely from a 0.8% increase in repair and maintenance as new work fell 0.4%. On an annual basis, GDP expanded 1.6%, the strongest growth since February 2025, accelerating from 1.1% in June and beating expectations of 1.2%.

The UK economy grew 0.3% month-on-month in June 2026, compared with zero growth in May and expectations for no change. The economy was helped by the temporary decline in energy costs, along with hot weather and World Cup football. Services output remained the sole driver of overall growth, rising 0.4%, with the largest positive contribution coming from professional, scientific and technical activities (1%), particularly scientific research and development, which rose to its highest level since January 2025, as well as legal activities. Administrative and support service activities (1.8%) and information and communication (0.9%) also contributed positively to GDP growth. This more than offset declines in production (-0.2%) and construction (-0.1%). Yearly, GDP rose 1.1%, slowing slightly from a revised 1.2% increase in May but exceeding forecasts of a 0.8% growth. GDP increased 0.4% in the three months to June, matching expectations, after a revised 0.6% rise in the previous period.