Monthly real gross domestic product (GDP) is estimated to have grown by 0.2% in September, following growth of 0.1% in August, according to the latest statistics from the Office for National Statistics (ONS).
Looking at the broader picture, GDP showed no growth in the three months to September.
Services output rose by 0.2% throughout the month, driven by growth in professional, scientific and technical activities, and human health and social work activities, and was the main contributor to the growth in GDP.
Output in consumer facing services fell by 0.2%, while production output showed no growth during the period.
In addition, the construction sector grew by 0.4% in September following a decline of 0.8% the month prior.
Reaction:
Nicholas Hyett, investment analyst, Wealth Club:
“The UK economy remains surprisingly resilient, with GDP growth beating expectations and still in positive territory despite pressure from higher interest rates, higher input costs and the cost of living squeeze.
“Consumers continue to feel significant pain, and there are some technical reasons behind the positive GDP growth, particularly in the healthcare sector where the covid booster jab campaign and a marginal decline in industrial action month-on-month both increased output.
“But there are also signs of genuine progress in high value service areas, like engineering and technical analysis.
“Overall, the Government and Bank of England will probably be quite happy with this level of growth, so long as inflation continues to fall as expected next week.
“Economic stagnation isn’t pretty long term, but if inflation can be brought under control without pushing the economy into outright recession, then that will be no mean feat.”
Lindsay James, investment strategist at Quilter Investors:
“GDP figures today confirmed a UK slowdown that has been increasingly signalled by leading indicators in recent months, with cracks having appeared in consumer spending and business activity with a knock-on effect for labour demand.
“September’s data did positively surprise thanks to the UK’s strong services sector, but was not enough to offset July’s negative print and produce any growth in Q3 relative to the previous quarter.
“While somehow avoiding a recession this year, today’s no growth reading means the UK economy is flatlining with only 0.2% economic growth in the last six months.
“Unfortunately, for many the economic pain has only been delayed. As the Bank of England stated earlier this month that more than half of the impact of higher interest rates on the level of GDP is still to come through, the UK economy faces growing headwinds as we approach 2024.
“Whilst inflation data may soon provide some signs of cooling, uncertainty remains over the direction of energy prices due not only to the risk of the crisis in the Middle East expanding, but also resulting from the ongoing disruption to global gas supplies eventually feeding through to the Energy Price Cap.
“With the UK one of the closest of all advanced economies to a stagflation scenario, this leaves the Bank of England with the difficult predicament of how long they can maintain rates at this level given the increasingly apparent impact on GDP.
“And with 2024 very likely to be an election year, the timing couldn’t be worse for the government to be heading into what feels like a recessionary period.”
