The economy resumed its downward path in July, hit by a drop in the services sector in further evidence that interest rate rises are slowing down the engines of growth in the UK.
Figures from the Office for National Statistics (ONS) showed gross domestic product (GDP) fell by 0.5%, with falls in all three main sectors, following growth of 0.5% in June.
Darren Morgan, the ONS’s director of economic statistics, said: “In July, industrial action by healthcare workers and teachers negatively impacted services and it was a weaker month for construction and retail due to the poor weather.
“Manufacturing also fell back following its rebound from the effect of May’s extra Bank Holiday,” he added.
But for the three months to July, GDP increased by 0.2% with growth in all three main sectors.
Services output was down 0.5% after growth of 0.2% in June, and was the main contributor to the fall in GDP in July.
Output in consumer-facing services showed no growth in July, following growth of 0.5% in June.
Production output fell by 0.7% in July after growth of 1.8% in June while the construction sector fell by 0.5% after growth of 1.6% in June.
But Samuel Tombs at Pantheon Macroeconomics doesn't think July’s drop "marks the start of a falling trend, given that it can be uncontroversially attributed to one-off developments".
He noted sharp falls in output in the health and education sector, which collectively subtracted 0.24 percentage points from month-to-month growth in GDP, were the result of strikes.