UK economy grew by 0.2% in July

New figures from the Office of National Statistics  (ONS)  have indicated that monthly real gross domestic product (GDP) is estimated to have grown by 0.2% in July 2022 following a fall of 0.6% in June 2022.

Monthly GDP is now estimated to be 1.1% above its pre-coronavirus levels (February 2020).

The services sector grew by 0.4% in July 2022 and was the main driver to the rise in GDP. However, both production and construction fell in July 2022, by 0.3% and 0.8% respectively, and this was the second consecutive fall for both these sectors.

Commenting on ONS data Kitty Ussher, Chief Economist at the Institute of Directors, said “Given all the talk of recession, businesses will be reassured to hear that the economy grew in July, at around its long-term trend rate. When looking at the last three months together, it shows the economy flatlining as the impact of higher inflation works its way through the system.”

“Consumer spending was reasonably strong, as hot weather, a strong sporting schedule and holiday bookings boosted retail and recreation activities.”

“Set against this is weakness in some parts of the manufacturing sector, although it is notable that this is concentrated in pharmaceutical production which would be expected to be more volatile coming out of a pandemic. The data also shows early signs of reduction in demand for energy, possibly because of the higher prices.”

“The key judgement the Bank of England will make when it meets on Thursday is whether an essentially flat economy is sufficient to squeeze homegrown inflation out of the system or whether further tightening is needed.”