UK economy expands in August after July dip, but growth undershoots expectations
UK economygrew in August after shrinking in July, but the expansion undershot expectations. UK GDPgrew 0.4% in August after a fall of 0.1% in July, leaving the economy0.8% smaller than before COVID struck.
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The UK economy expanded in August after shrinking slightly in July, but growth narrowly undershot expectations and analysts said supply shortages would make the coming months difficult.
UK gross domestic product grew 0.4% in August after a revised 0.1% fall in July, the Office for National Statistics said Wednesday. August's reading was below expectations of 0.5% growth.
Output in the all-important services sector grew 0.3%, leaving it just 0.6% smaller than in February 2020.
The August expansion left overall UK GDP 0.8% below where it was in February last year, the ONS said. That's a much smaller gap than in July, after previous months' growth figures were revised upwards.
"The economy picked up in August as bars, restaurants and festivals benefited from the first full month without COVID-19 restrictions in England," Darren Morgan, director for economic statistics at the ONS, said.
The UK economy grew rapidly in the second quarter, but growth has slowed in recent months as the recovery has shifted into a lower gear. Rising delta variant
Now, economists say the economy faces more hurdles in the form of supply chain disruptions and soaring energy prices, which led to panic buying at gas stations in early October.
The International Monetary Fund on Tuesday said the UK's recovery will lag behind that of the other G7 nations, as coronavirus and Brexit leave scars on the economy. It said UK GDP would be around 3% smaller in 2024 compared to the IMF's forecasts in the fall of 2019.
"We suspect shortages will be a bigger drag on GDP in September and October - the petrol crisis probably prevented some people from getting to work," Paul Dales, chief UK economist at Capital Economics, said.
"So while the chances of a rate hike this year have risen recently, a weaker activity outlook means it's not a done deal."
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