GDP Grows in July But Outlook Remains One of Recession

Pub. Date
12 September, 2022
Pub. Type

Main points

  • GDP grew by 0.2 per cent in July, contrary to our forecast last month of no growth, with consumer-facing services displaying stronger performance than expected despite overall decreased consumer confidence resulting from inflationary pressures and uncertainty.
  • While August PMI surveys noted a slight expansion in the UK services sector, the headline business activity balance has fallen close to the neutral 50; globally, a contraction in business activity was noted for the first time since June 2020.
  • Manufacturing and construction PMIs have both recorded declines below the neutral 50, with the former reaching a 27-month low.
  • We still expect the UK economy to contract by 0.1 per cent in the third quarter, with growth slowing as inflation maintains its drag on consumer demand and confidence.

"GDP grew by 0.2 per cent in July following the large fall of 0.6 per cent in June.  This was stronger than we had expected and was driven by a rise in services, particularly consumer-facing services, with production and construction continuing to fall.  That said, GDP in the three months to July was flat relative to the previous three months and we think the UK economy remains in recession.”

Stephen Millard
Deputy Director for Macroeconomic Modelling and Forecasting

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