The UK economy returned to growth in August after a sharp fall in July, figures from the Office for National Statistics (ONS) showed.
The ONS said monthly real gross domestic product (GDP) rose 0.2% in August, following a fall of 0.6% in July, downwardly revised from a 0.5% fall.
Looking at the broader picture, GDP increased by 0.3% in the three months to August, with growth in all sectors.
Services output rose by 0.4% in August and was the main contributor to the growth in GDP.
Output in consumer-facing services fell by 0.6% in August after a fall of 0.2% in July, revised down from no growth.
Production output fell by 0.7% in August after falling by 1.1% in July, revised down from a 0.7% fall, while the construction sector fell by 0.5% in August after a fall of 0.4% in July, revised up from a 0.5% decline.
Director of economic statistics at the ONS, Darren Morgan, said: “Within services, education returned to normal levels, while computer programmers and engineers both had strong months.”
Samuel Tombs at Pantheon Macroeconomics thinks it “is touch and go as to whether GDP dropped marginally in Q3”.
He explained the three-month-on-three-month growth rate will fall sharply in September, when June’s weather-boosted level of GDP will transfer to the denominator.
“GDP would have to rise by 0.2% on a month-to-month basis again in September, for a quarter-on-quarter contraction to be avoided,” he estimated, which “looks just out of reach”.
He said this was because two-thirds of the increase in August reflected increases in output in the education and health sectors, as strike disruption faded, rather than underlying momentum.
He also highlighted the latest surveys point to a weather-related fall in retail sales in September and a further downturn in manufacturing output.
Indeed, manufacturing output, which fell by a further 0.8% in August, “probably still has further to fall, as businesses trim inventories now that the cost of working capital has shot up and supply chains have normalised”.
“Nonetheless, our base case remains that GDP rises gradually in Q4 and into 2024,” Tombs added.