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UK set to avoid recession despite poor August | |
(32 minutes later) | |
The UK's economy is expected to avoid a recession despite new figures showing a surprise contraction in August. | |
The economy shrank by 0.1% during the month, the Office for National Statistics (ONS) said, but growth in July was revised upwards to 0.4%. | |
In the three months to the end of August the economy grew 0.3%, indicating a recession can be avoided. | |
The ONS said weakness in the manufacturing sector was offset by buoyant TV and film production. | |
"Services provided [the] majority of the growth over the three months, with production and manufacturing falling back," said Rob Kent-Smith, head of GDP at the ONS. | |
The growth figures are being watched closely for signs of recession - defined as two consecutive quarters of contraction - after the economy shrank in the second quarter for the first time since 2012. | |
The next quarter runs until the end of October so the August data is the second month in the third quarter. | |
The contraction during August is not, however, expected to indicate a recession is looming. | |
Reuters reported that the ONS said the economy would have to contract by an unusually large 1.5% in September for this happen. | |
"The fact that growth in July was revised up from 0.3% month-on-month to 0.4% means fears that the economy is already in recession have been banished," said Andrew Wishart, UK economist at Capital Economics. | |
He now thinks the economy could grow by 0.4% in the third quarter, more than he had originally expected. | |
In August, the economy was dragged lower by a drop in manufacturing when car production was subdued. |