UK economy returns to growth in August

GPD rose 0.2%, in line with consensus expectations, following a downwardly-revised 0.6% contraction in July. This was revised from a 0.5% fall.

The services sector grew 0.4%, but the production and construction sectors shrank 0.7% and 0.5%, respectively.

ONS director of economic statistics Darren Morgan said: "Our initial estimate suggests GDP grew a little in August, led by strong growth in services which was partially offset by falls in manufacturing and construction.

"Within services, education returned to normal levels, while computer programmers and engineers both had strong months.

"Across the last three months as a whole, the economy has grown modestly, led by car manufacturing and sales, and construction."

Ruth Gregory, deputy chief UK economist at Capital Economics, said: "Overall, the economy is not in recession, but it doesn’t have much underlying momentum either. And the drag from higher interest rates will continue to grow.

"That’s why we continue to forecast a 0.2% q/q contraction in Q3 and a similar sized decline in the fourth quarter."