UK economy fares worse than expected in July as strikes weigh

People stand at Greenwich Park, with the Canary Wharf financial district in the distance, in London, Britain, Aug 29, 2023. REUTERS/Kevin Coombs/File photo

LONDON  -Britain’s economy contracted at the fastest pace this year in an unexpectedly poor reading for the month of July, with strikes in hospitals and schools weighing on output, official data showed on Wednesday.

The Office for National Statistics said gross domestic product shrank 0.5 percent in July from June, worse than all forecasts in a Reuters poll of economists that had pointed to a contraction in gross domestic product (GDP) of 0.2 percent from June.

All major sectors of the economy – services, manufacturing and construction – declined in July, the data showed.

The data underlined signs that Britain’s economy is weakening, perhaps by more than the Bank of England had expected ahead of its September interest rate meeting.

Data on Tuesday showed a faster rise in the unemployment rate than the central bank expected, although the BoE remains worried that strong wage growth will fuel persistent inflation.

The ONS said the health sector was the biggest driver behind the 0.5 percent drop in services output and cited industrial action by senior and junior doctors as a cause of appointment cancellations. Schools in England also saw strikes.

Unusually wet weather in July hurt output in retail and construction companies, the ONS said.

Wednesday’s data do not include recent, substantial upward revisions to the performance of Britain’s economy up to the end of 2021.