Data published by the Office for National Statistics (ONS) showed that GDP grew by 0.1% in the 3rd quarter, slowing sharply compared to the 2nd quarter (+0.5%) and recording the weakest increase in the last three quarters. Economists had expected the economy to expand by 0.2%. On an annual basis, GDP grew by 1.0% in the 3rd quarter, as expected, after an increase of 0.7% in the 2nd quarter. The latest increase was the strongest since the 4th quarter of 2022.
The ONS said services output increased by 0.1%, following growth of 0.6% in the 2nd quarter. 8 out of 14 services subsectors increased in the 3rd quarter, down from 10 in the previous quarter. Overall, non-consumer-facing services (business-facing services) showed no growth in the 3rd quarter, while consumer-facing services increased by 0.5%. The largest contributor to the growth in service output was a 0.7% increase in the professional, scientific and technical activities subsector. Meanwhile, the production sector is estimated to have fallen by 0.2%, following a 0.3% decline in the 2nd quarter. The fall in production was largely driven by a 2.7% decline in electricity, gas, steam and air conditioning supply. Manufacturing output increased by 0.2%, with 7 out of the 13 manufacturing subsectors increasing in the latest quarter. Within manufacturing, the largest positive contribution was in basic metals and metal products, which grew by 1.4% on the quarter.
The data also showed that real household expenditure increased by 0.5%, following a growth of 0.2% in the 2nd quarter. Within household consumption, the largest contributions to the growth were from higher spending on housing, miscellaneous, and clothing and footwear. Real government consumption expenditure increased by 0.6%, following growth of 1.1% in the previous quarter. The increase mainly reflects increased expenditure in education, as well as higher school attendance numbers.
Last week, the Bank of England trimmed its annual growth forecast for 2024 to 1% from 1.25% but predicted a stronger 2025, reflecting a short-term boost to the economy from the big-spending budget plans.