UK GDP growth accelerated from 0.3% to 0.4% m/m in July, beating expectations for no growth. All three main sectors expanded on the month, with services up 0.4%, production up 0.2%, and construction up 0.1%. Over the three months to July, GDP also grew 0.4%, marking an eighth consecutive three-month expansion, although the composition was less even: services rose 0.6%, while production and construction both contracted 0.5%.
Services provided the main support, led by business-facing and technology-related activity. Administrative and support services rose 3.7%, while information and communication gained 2.4%. Computer programming, consultancy and related activities jumped 3.5%, contributing 0.12 percentage points to overall GDP growth. ONS noted that many of the businesses reporting the strongest turnover were involved in artificial intelligence and cloud computing, although it said the precise contribution of those activities could not be quantified. Wholesale and retail trade was a notable drag, falling 1.0%.
Manufacturing also delivered a sizeable rebound. Output swung from -0.5% to +0.9% m/m, more than double the 0.4% consensus, while industrial production moved from -0.2% to +0.2%, slightly above the 0.1% forecast. Eight of 13 manufacturing subsectors expanded, led by a 5.2% rise in computer, electronic and optical products and a 3.4% increase in pharmaceuticals. Those gains were partly offset by weakness in rubber and plastics and machinery and equipment.
The July report therefore points to firmer UK activity than the headline consensus implied, but not to uniformly strong domestic demand. Consumer-facing services fell 0.4% m/m, while construction’s 0.1% increase came entirely from a 0.8% rise in repair and maintenance as new work fell 0.4%. The stronger GDP result was driven primarily by services, technology-related activity and a manufacturing rebound rather than a broad consumer acceleration, leaving the underlying picture constructive but still uneven.
Data Summary
| Indicator | Previous | Current | Expected |
|---|---|---|---|
| GDP m/m | 0.3% | 0.4% | 0.0% |
| Industrial Production m/m | -0.2% | 0.2% | 0.1% |
| Industrial Production y/y | -0.2% | 0.6% | 0.2% |
| Manufacturing Production m/m | -0.5% | 0.9% | 0.4% |
| Manufacturing Production y/y | 0.5% | 2.6% | 2.0% |
The ONS confirmed that July GDP growth was supported by services at 0.4%, production at 0.2%, and construction at 0.1%. Over the three months to July, GDP also rose 0.4%, with services up 0.6% while production and construction both fell 0.5%.
Components
| Component | Current |
|---|---|
| Services | +0.4% m/m |
| Production | +0.2% m/m |
| Construction | +0.1% m/m |
| Administrative & support services | +3.7% m/m |
| Information & communication | +2.4% m/m |
| Computer programming & consultancy | +3.5% m/m |
| Consumer-facing services | -0.4% m/m |
| Computer, electronic & optical manufacturing | +5.2% m/m |
| Pharmaceuticals | +3.4% m/m |
ONS noted that many of the strongest-turnover firms in computer programming, consultancy and information services were involved in AI and cloud computing, although it could not quantify the exact impact. Manufacturing growth was broad enough for 8 of 13 subsectors to increase in July.
Key Takeaways
- UK GDP accelerated from 0.3% to 0.4% m/m, clearly beating expectations for no growth.
- All three main sectors expanded in July, but services provided the strongest support.
- Manufacturing delivered the biggest upside surprise, rebounding from -0.5% to +0.9% m/m, more than double the 0.4% consensus.
- Technology-related activity stood out, with computer programming and consultancy up 3.5% and contributing 0.12ppt to overall GDP.
- The strength was not uniformly consumer-led: consumer-facing services fell 0.4%, while wholesale and retail trade also weakened.
- Construction rose just 0.1%, entirely because repair and maintenance increased, while new work fell 0.4%.
- Overall, July points to a firmer-than-expected economy, led by services, technology and manufacturing, but the softer consumer and construction details argue against calling it a broad-based acceleration.
