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Data React: Weak August GDP Print as Production and Services Contract

UK DATA
MNI (London)
  • UK August monthly GDP recorded a -0.3% m/m contraction. The consensus was anticipating the UK economy to have merely stalled at 0.0% m/m, having only expanded by +0.1% m/m in July.
  • Production was the largest downwards driver of growth, down -1.8% m/m. Manufacturing was the key drag, driven by declining pharma, transport and metals production.
  • Of note was also the index of services, which contracted marginally by -0.1% m/m (following +0.3% in July). This is weak for what should be the peak of summer service activity.
  • Consumer-facing services declined by 1.8% in August, with retail ex auto down 1.6% m/m- the largest fall since December.
  • The 5.0% fall in the arts and entertainment sector points towards a clear trend in declining consumer demand as the cost of living tightens disposable income spending.
  • This data points towards a Q3 contraction. Following the July, August releases, September will need a +1.1% read for Q3 to be flat, ONS said.

Source: ONS

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