UK economy grew by 0.4 percent in July, led by the services sector
The UK economy grew by 0.4 percent month-on-month in July, driven by digital transformation and artificial intelligence activities.
The UK economy expanded by 0.4 percent month-on-month in July, spearheaded by the services sector. While a surge in information technologies and AI-focused areas drove growth, weakness in consumer spending and contractions in certain sectors drew attention.
Digital and AI impact in the services sector
The primary engine of growth in July was the services sector, which expanded by 0.4 percent on a monthly basis. The information and communication sector increased by 2.4 percent, while computer programming and consultancy activities recorded a 3.5 percent rise.
According to ONS data, artificial intelligence and cloud computing activities stood out among high-turnover companies. Administrative and support services also concluded this period with a 3.7 percent growth.
Signs of weakness on the consumer front
Despite the general increase in the services sector, weakness on the consumer front was notable. Wholesale and retail trade fell by 1.0 percent, while direct consumer-facing services experienced a 0.4 percent drop.
Recovery in the industrial and construction sectors
The manufacturing sector, which lost ground in June and May, showed signs of recovery by growing 0.2 percent monthly in July. A 5.2 percent surge in computers and electronic products, along with increases in the pharmaceutical industry, influenced this rise.
Despite a 0.4 percent decline in new projects, the construction sector achieved a limited monthly growth of 0.1 percent thanks to a 0.8 percent increase in repair and maintenance work.
Quarterly sectoral divergence table
Although gross domestic product increased by 0.4 percent overall in the May-July period, this growth was entirely carried on the back of the services sector, which grew by 0.6 percent.
In the same 3-month period, both the production and construction sectors contracted by 0.5 percent, demonstrating that the economic recovery has not yet fully spread across the board.
August leading indicators and expectations
August leading indicators shared by the ONS pointed to weakness on the consumption side, with reduced customer traffic in retail stores and signs of stagnation in the housing market.
While 29 percent of companies stated that economic uncertainties negatively affected their turnover, the labor market continued to maintain its resilience.