- GDP fell by 0.1 per cent in Q2, contrary to our forecast last month of a slight increase, with only the Electricity and Gas, Water Supply and Management, and Distribution, Hotels and Restaurants sectors displaying stronger performance than expected.
- In July, PMI surveys recorded falls for the services, manufacturing and construction sectors, with the latter displaying the most worrying decline, falling below the neutral 50 for the first time since January 2021.
- Despite the economic downturn, the search for qualified staff continues in both the services and the manufacturing sectors, with staffing levels rising in July for a seventeenth consecutive month.
- Our second nowcast for the UK economy for the third quarter is for a contraction of 0.1 per cent, with growth likely to slow further as inflation drags on consumer demand.
“It now looks like the UK economy entered a recession in the second quarter of this year as GDP fell by 0.1 per cent, and we expect output to continue falling over the next three quarters. On the expenditure side, the fall in Q2 was driven by a 0.2 per cent fall in consumption; on the output side, by a 0.4 per cent fall in services, particularly, health and social work. GDP fell by 0.6 per cent in June after a revised rise of 0.4 per cent in May as the Platinum Jubilee celebrations affected the monthly profiles.”
Deputy Director for Macroeconomic Modelling and Forecasting
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