September 2018 GDP Tracker

UK economic growth gathers momentum

Main points

• Latest economic data confirms that the UK economy has recovered from a soft patch earlier in the year and is now growing at a pace that is above potential.

• According to new ONS statistics published this morning, the UK economy expanded by 0.6 per cent in the three months to July compared with the previous three months after growing by 0.4 per cent in the second quarter (three months to June). The outturn was slightly higher than the 0.5 per cent monthly GDP forecast that we published last month for the same period. Building on the official data, our monthly GDP Tracker suggests that the economy is set to maintain the 0.6 per cent pace for the remainder of the third quarter.

• The official data for July shows that retail sales responded strongly to recent warm weather and the football World Cup as did construction sector output which has recovered after a lacklustre performance at the start of 2018. Growth for the third quarter as a whole is likely to be driven by the service and construction sectors.  

Amit Kara, Head of UK macroeconomic forecasting, said “The economy gathered momentum in the three months to July after rebounding from the weather-related disruption in the first quarter and is now growing at a speed that is faster than our estimate of potential. Looking ahead into August and September, we see the economy maintain the 0.6 per cent three-month-on-three-month growth rate driven mainly by growth in the services and construction sectors.”

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