The UK economy grew at the fastest pace in almost a year between May and July, as construction output rebounded and a heatwave boosted retail sales and the powerhouse services sector.
Gross domestic product increased 0.6 per cent from the three months through April, the most since August last year, the Office for National Statistics said on Monday. That’s more than economists forecast and up from 0.4 per cent in the second quarter.
The figures appear to vindicate the Bank of England’s decision to raise interest rates last month. Annualised growth in the latest period was 2.4 per cent, well above the pace policymakers believe will fuel inflation.
BOE officials, expected to keep policy unchanged on Thursday, have indicated that further modest hikes will be needed to bring inflation back target.
The solid performance in the latest period came as a prolonged heatwave helped the economy rebound from a snow-blighted start to the year.
Construction output jumped 3.3 per cent, while services, the largest part of the economy, rose 0.6 per cent with retail sales benefiting from the warm weather and soccer World Cup, the ONS said. Manufacturing and industrial production, by contrast, contracted.
A similar pattern was on display for July alone, when economic growth accelerated to 0.3 per cent — more than forecast — from 0.1 per cent in June.
The big question mark over the economy remains Brexit, with economists warning that failure to reach a deal with the European Union could deliver a shock to investment and consumer spending.
Separate figures showed the trade deficit in goods narrowed to a five-month low of £9.97 billion (Dh47.29 billion) in July, aided by a 2.8 per cent rise in exports. The shortfall including services fell to just £111 million.