MNI BRIEF: UK Economy Contracts As Industrial Action Weighs
UK economy slows at faster pace than expected, but BOE rate setters will remain focused on labour, inflation data for now.
UK GDP fell a bigger than expected 0.5% in July, as bad weather and a string of industrial action weighed on the economy, the Office for National Statistics said Wednesday. City analysts had expected the economy to contract 0.2% in the month.
"Industrial action by healthcare workers and teachers negatively impacted services and it was a weaker month for construction and retail due to the poor weather. Manufacturing also fell back following its rebound from the effect of May’s extra Bank Holiday," Darren Morgan, the ONSDirector of Economic Statistics said.
In the 3 months to July, the econony grew 0.2%, helped by a strong June reading. "Initial estimate for July shows that GDP fell; however, the broader picture looks more positive, with the economy growing across the services, production and construction sectors in the last three months," Morgan added.
The data will have little impact on the Bank of England's Monetary Policy Committee ahead of their September meeting, who have already pencilled in sluggish growth for coming quarters, but it does underline the dilemma thay face, with slow and stagnant growth and still high inflation.