The UK economy shrank by 0.1% in September, with a steep fall in car production weighing on overall output even as services and construction edged higher.
On a three-month basis, real GDP grew 0.1% in the period to September compared with the three months to June, while GDP was 1.1% higher than a year earlier.
Production output fell 2.0% in the month, driven largely by a 28.6% drop in the manufacture of motor vehicles, trailers and semi-trailers, which subtracted 0.17 percentage points from September’s GDP.
Services grew 0.2% and construction rose 0.2% in September, with services up 0.2% and construction up 0.1% over the three months to September.
Manufacturing output declined 1.7% in the month and 0.8% over the three-month period, while within services the largest positive monthly contribution came from wholesale and retail trade, repair of motor vehicles and motorcycles, up 1.4%.
Analysts cautioned against reading the monthly setback as a turning point but said broader headwinds persist.
George Lagarias, chief economist at Forvis Mazars, said: “Weak British GDP in September is not idiosyncratic, but rather the result of global headwinds and weak demand for manufacturing products.
“Next month’s numbers should be a bit higher, as October’s manufacturing somewhat stabilised, but we don’t see the case for an economic rebound at this point.
“Today’s numbers, combined with higher unemployment and weaker wage growth, bring a December rate cut from the Bank of England even closer.”
Others pointed to the outsized impact of the auto sector disruption on the monthly print.
Nicholas Hyett, investment manager at Wealth Club said: “A shrinking economy is not what any Chancellor wants days before a Budget.
“However, in this case it’s the cyberattack on Jaguar Land River that has slammed the brakes on UK economic growth, and without it economic activity would be showing a modest pick up.
“The massive knock on effects of events at a single company shows how vulnerable the UK economy is at the moment.
“Not only are large companies at risk from increasing cyberattacks, but the economy as a whole is reliant on a few central employers whose fortunes ripple out across the entire country.
“Large national champions are great – but they need to form part of a diverse economic ecosystem and today’s numbers are an excellent example of why the government should be looking hard at supporting small businesses in particular in the Budget.
“Small companies are any country’s economic engine, and they have the added advantage of not tripping the entire economy when things go wrong.”
