UK GDP expands by 0.6% as services sector drives growth

Key events

UK grows 0.6% in Q2

Newsflash: The UK economy grew by 0.6% in the second quarter of the year, as it continues to pull away from last year’s shallow recession.

That’s a slight slowdown on the first quarter, where the economy expanded by 0.7%, but still a healthy growth rate.

The Office for National Statistics reports that the services sector drove growth, while the production sector and construction both shrank slightly.

GDP is estimated to have grown 0.6% in Quarter 2 (Apr to June) 2024, following growth of 0.7% in Quarter 1 (Jan to Mar).

Services (+0.8%) grew while production (-0.1%) and construction (-0.1%) both contracted.

Read GDP first quarterly estimate, UK ➡️ https://t.co/h1NTYmpipY pic.twitter.com/cOj8VlAp6x

— Office for National Statistics (ONS) (@ONS) August 15, 2024

Compared with a year ago, real GDP is estimated to have increased by 0.9%.

This morning’s data will be the first estimate of GDP in June, rounding off the second quarter of the year.

But previous monthly data has shown that the economy flatlined in April, before growing by 0.4% in May – which was seen as an early boost for the Labour government.

Introduction: UK GDP in focus

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How strongly, or weakly, was the UK economy growing at the end of Rishi Sunak’s premiership?

We’ll find out shortly, when GDP data for June – and for the second quarter of 2024 – are released.

City economists predict the UK posted a quarter of solid growth. GDP is forecast to have grown by 0.6% in April-June, which would be a slight slowdown on the 0.7% recorded in January-March.

But in June alone, the economy may have stalled – with no growth forecast.

Sanjay Raja, chief UK economist at Deutsche Bank, says the service sector was driving activity in the last quarter:

On our calculations, the services economy will likely bounce up by 0.7% q-o-q – despite expected contractions in both the production and construction sectors over the same quarter.

On the expenditure side, we expect government spending, business investment, inventories, and net acquisitions to provide the bulk of the lift to quarterly GDP.

The strength – or otherwise – of the UK economy will also influence how soon the Bank of England feels confident to cut interest rates again, after inflation rose by less than expected in July: