UK economic growth stalls in third quarter

15th Nov 2024 07:01

(Sharecast News) - The UK economy grew by 0.1% in the last quarter, official data showed on Friday, slightly below expectations.

The Office for National Statistics said growth in the three months to September had been led by strength in the retail trade, excluding motor vehicles, and new construction work.

Output in the construction sector jumped 0.8%.

The 0.1% uptick was, however, below second-quarter growth of 0.2%. It also missed analyst expectations for a 0.2% improvement.

In September, GDP fell 0.1%. The ONS said a "notable" increase in car sales had been offset by a "slow month for IT companies". Also weighing on growth was the manufacturing sector, with production output down 0.5% .

The services sector, one of the main drivers of economic growth in the UK, was flat.

Liz McKeown, director of economic statistics at the ONS, said: "The economy grew a little in the latest quarter overall, as the recent slowdown in growth continued.

"Retail and new construction work both performed well, partially offset by falls in telecommunications and wholesale. Generally, growth was subdued across most industries in the latest quarter."

Andrew Goodwin, chief UK economist at Oxford Economics, said: "After a surprisingly strong first half of 2024, recent softer GDP releases have underwhelmed.

"But delving into the detail suggests the picture isn't quite as bad as the headline figures suggest. A big part of September's fall was due to a plunge in information and communications output. This sector has been one of the star performers in recent years and September's drop is likely to prove a blip.

"On balance, we don't think that the data is cause for renewed concern. But the economy is clearly not carrying the sort of momentum that earlier data had suggested."

James Smith, developed markets economist, UK, at ING, said: "Don't read too much into the latest slowdown in GDP. The figures look volatile, and consumer-facing services have been growing more quickly and consistently over the summer.

"Expect modest growth over winter and boost next from the Budget, though the health of the jobs market remains a key risk in 2025."

Matt Swannell, chief economic advisor to the EY Item Club, said: "Looking ahead, [we] expect the economy to grow at a solid, albeit unspectacular pace in 2025, but this is likely to mask some offsetting forces.

"Measures announced in the Budget suggest fiscal policy will be less restrictive, while the effects from looser US fiscal policy should also act as a modest tailwind.

"However, tight financial conditions will continue to weigh on disposable incomes."