UK economy flatlines in July as manufacturing slump

The UK economy stalled in July as a sharp downturn in manufacturing wiped out gains from buoyant consumer spending and steady construction activity, according to official figures.

Data from the Office for National Statistics (ONS) showed gross domestic product (GDP) was unchanged month on month, following 0.4% growth in June. The zero-growth reading comes despite a “bumper month on the high street”, with services output – which makes up around four-fifths of the economy – edging up 0.1% in July. Construction also expanded by 0.2%.

However, production output tumbled by 0.9%, the largest monthly fall in manufacturing for a year, offsetting gains elsewhere.

Over the three months to July, the economy grew by 0.2%, slowing from 0.3% in the three months to June and 0.6% in the three months to May. Growth has steadily eased since the 0.8% expansion recorded in the three months to April.

The ONS said services continued to drive overall momentum, rising 0.4% over the May–July period. Construction added 0.6% over the same window, but output in production industries shrank by 1.3% – deepening its 0.3% fall in the three months to June.

The figures highlight the fragility of the UK’s recovery, with strong consumer-facing industries propping up GDP as factories struggle with weaker global demand, higher borrowing costs and lingering supply chain pressures.

George Lagarias, Chief Economist at Forvis Mazars, commented: “The UK economy continues to grow at a sluggish pace, as industrial production suffers from worsening global demand.

“The services sector keeps things humming, but the economy needs more than just services if it is to break out of its rut. The central bank, which sees inflation pressures still somewhat intense, can do very little until next year, so it will be up to the government’s fiscal policy or to a reversal of international trade conditions if growth is to pick up.”