UK GDP likely to shrink in August as services slowdown looms

UK economic data for August are projected to reveal a contraction, reversing the unexpected gains recorded in June and July. The downturn is attributed mainly to a slowdown in the three core service categories—professional services, administration, and information and communication—after a July surge fueled by AI and cloud demand. Pantheon Macroeconomics' chief economist Robert Wood estimates a 0.3% decline, whereas RSM UK's chief economist Thomas Pugh expects a milder 0.1% drop but cautions that inflation could curb future growth.

Manufacturing output is likely to be near-flat, with gains in some factories offset by weakness in the automotive sector. Deutsche Bank analysts predict the month will see no net growth, counting on a slight rise in services to offset falls in production and construction. The mixed forecasts underscore lingering uncertainty as businesses and consumers face rising price pressures heading into the final quarter of the year.