UK economy sees slight boost in July

Gross domestic product (GDP) is estimated to have grown by 0.2% in July 2022 following a fall of 0.6% in June 2022.

Looking more broadly, however, GDP was flat in the three months to July compared with the previous three months. 

The growth in July was largely driven by the services sector, which grew by 0.4% in July 2022. However, both production and construction fell in July 2022, by 0.3% and 0.8% respectively.

Richard Pike, chief sales and marketing officer at Phoebus Software says:

“We have seen a 0.2% uplift in GDP in July, but unfortunately a lot of this will be ironically, and sadly, attributed to the Queens Platinum Jubilee celebrations. The funeral on Monday is likely to have a reverse effect on GDP and so it does remain to be seen whether we technically hit a recession sooner rather than later. The oil price cap seems to be affecting the markets positively with prices lowering and this hopefully will assist the long term situation.

“Even though we are in a weeks’ mourning, there are a number of economic statements and announcements that will go ahead this week and that will shape the Bank of England’s rate decision in key areas such as employment, inflation and retail sales figures.

“Widely a 0.5% increase rate increase is expected and this is only going to squeeze many people’s household budgets, especially those on variable rates. The credit industry is seeing an upward shift in collections activities and this is only likely to continue for the foreseeable future. Those institutions with automation of manual tasks and borrower self-service will see the benefit of their investment in these areas, allowing collectors to speak with those borrowers that are more complex or in need of a more hands on approach to their circumstances.”

Derrick Dunne, CEO of YOU Asset Management (YOU), commented: 

“The UK economy grew by 0.2% in July, stronger than expected following a contraction of 0.6% the previous month. At a sector level, the ONS reported information and communication to be the main contributor to services growth, while the production industry was among those making downward contributions, thanks to a fall in electricity, gas, and air conditioning supply.

“While useful for monitoring economic activity, it’s important to keep in mind that GDP data is a lagging indicator and a reflection on older patterns and behaviours. Particularly with experts reporting the June data to have been distorted by the two bank holidays, the bounce-back we see today should therefore be taken with a pinch of salt.

“The current environment of political changes, recessionary rumours and surging energy prices serve to highlight why investors cannot afford to come off high alert. With inflation set to remain high on Wednesday and yet more monetary policy action predicted next week, we will no doubt see more volatility in the months ahead.