The United Kingdom’s Gross Domestic Product (GDP) exhibited unexpected resilience in September, posting a growth of 0.2%, surpassing the revised-down figure of 0.1% in August. Despite flat growth over the three months to September, specific sectors played pivotal roles in maintaining the positive momentum.
The services sector emerged as the driving force, expanding by 0.2%, propelled by robust performances in professional, scientific, and technical activities, as well as healthcare. Contrarily, Consumer Services experienced a 0.2% decline month-on-month, reflecting ongoing challenges faced by consumers.
Construction output demonstrated a notable increase of 0.4% month-on-month, contributing positively to the overall economic picture. Meanwhile, production remained stagnant during the same period.
Nicholas Hyett, Investment Analyst at Wealth Club, remarked on the surprising resilience of the UK economy, citing factors such as the COVID-19 booster jab campaign and a marginal reduction in industrial action, particularly in the healthcare sector.
Hyett highlighted that despite challenges posed by higher interest rates and escalating input costs, there are signs of genuine progress in high-value service sectors, notably engineering and technical analysis.
While acknowledging the persistent financial strain on consumers, Hyett expressed optimism, suggesting that the government and the Bank of England may find the current level of growth satisfactory, contingent upon the anticipated decrease in inflation next week.
Hyett concluded, “Economic stagnation isn’t pretty long term, but if inflation can be brought under control without pushing the economy into outright recession, then that will be no mean feat.”
Market analysts had anticipated a 0.1% contraction in GDP, according to Trading Economics. The unexpected positive growth could have implications for the government’s economic strategies and policies, depending on the trajectory of inflation in the coming weeks.
