Heatwave plays its part as GDP in UK grows by 0.7% over the summer months

THE UK economy grew at a healthy rate over the summer months, helped in part by the bout of warm weather.

The Office for National Statistics (ONS) said gross domestic product (GDP) growth was 0.7% between June and August.

Economists had been expecting a 0.6% rise for the three months to August.

Itwasthesamerateofgrowth logged in the three months to July after an upward revision of 0.1% for the period, thanks to revisions in the services sector.

GrowthratesforJuneandJuly were both revised higher by 0.1% to 0.2% and 0.4% respectively, helping make up for flat growth in August that fell short of consensus estimates for a 0.1% rise.

The statistics agency said the summer’s heatwave provided a welcome boost to the economy, after it suffered under unusually cold weather brought in by the Beast from the East earlier in the year.

“The growth continued to pick up from the negative growth in April 2018, with the most recent period rebounding from this weak start to the year and being boosted by the warmer than usual weather in the summer months,” the ONS said.

Pay growth: Andy Haldane

The economy was also helped by a 2.9% jump in construction activity as well as a 0.7% rise in production in the three months to August.

The UK’s powerhouse services sector grew by 0.5% between June and August, which the ONS said resulted in a “large positive contribution to headline GDP growth”.

But the statistics agency said the rate of growth is still failing to match long-term trends.

ONS head of GDP Rob KentSmith said: “The economy continued to rebound strongly after a weak spring, with retail, food and drink production and house-building all performing particularly well during the hot summer months.

“However, long-term growth continues to lag behind its historical trend.”

On a month-on-month basis, construction contracted 0.7% in August, while services failed to log monthly growth, coming in flat at 0%.

Production grew just 0.2%, having been held back by a 0.2% contraction in manufacturing activity.

Agriculture activity, meanwhile, fell by 0.2%.

Meanwhile, a drop in union membership and the rise of the gig economy have contributed to a “lost decade” for wage growth and continue to pose a risk to future pay rises, according to Bank of England chief economist Andy Haldane.

He said that while he sees evidence “of a new dawn” for pay growth, structural issues like a drop in collective bargaining could derail that trend.

“With wage growth picking up for the first time in a lost decade, the risks to domestic costs are now broadly-balanced, though still significant,” he said in a speech at a conference in London.

“Take unionisation. Its downward trend historically has suppressed pay growth. If this trajectory were to continue, the fraction of the workforce unionised would fall by a further 16% percentage points by 2030.”