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| UK GDP growth slows more than expected to 0.5% | |
| (35 minutes later) | |
| Britain’s economic growth slowed more than expected in the third quarter, hit by the biggest construction slump in three years and a manufacturing sector mired in recession. | |
| The data represents a blow to George Osborne’s much-trumpeted “March of the makers” and further suggests any interest rate rises are unlikely until next year. | |
| GDP grew by 0.5% in the three months from July to September, down from 0.7% in the previous three months, the Office for National Statistics said. Most economists were forecasting 0.6%. | |
| Related: UK GDP growth figures released - live updates | Related: UK GDP growth figures released - live updates |
| Chris Williamson, chief economist at economic pollsters Markit, said: “The third quarter slowdown, and warning lights from recent business surveys about the weakness intensifying in September, suggests that policymakers will want more time to assess the extent of the slowdown as we move into the fourth quarter, effectively postponing any rate hikes until next year.” | |
| The service industries continue to be the main driver of growth, rising 0.7% – the strongest performance since the end of 2014. The construction sector shrank 2.2%, however, and factory output dropped by 0.3%, marking the third quarter of contraction. Overall industrial output benefited from a bounce in oil production, as there were fewer maintenance shutdowns than in previous years. | |
| The ONS said that the unusually wet weather in August may have been a factor behind the construction slump, and its quarterly estimate assumed the sector bounced back with 1.3% growth in September. | |
| Manufacturing has been affected by cooling global demand – especially from China and other emerging markets – exacerbated by the strong pound. | |
| Following the disappointing figures, the chancellor said the UK economy continued to outperform other major economies but that Britain “must live within our means”. | |
| GDP is 0.5%. UK continues to outperform other major economies. But global risks mean we go on with tough decisions to live within our means | GDP is 0.5%. UK continues to outperform other major economies. But global risks mean we go on with tough decisions to live within our means |
| Growth had bounced back strongly in the second quarter after an increase of just 0.4% from January to March. | Growth had bounced back strongly in the second quarter after an increase of just 0.4% from January to March. |
| This is the first official snapshot of economic growth for the quarter and could be subject to revisions in the months ahead. | This is the first official snapshot of economic growth for the quarter and could be subject to revisions in the months ahead. |
| Zach Witton, deputy chief Economist at EEF, the manufacturers’ organisation, said: “Growth was partly dragged back due to manufacturing remaining in recession. The weakness was broad based across the sector as recent challenges have been exacerbated by the sharp contraction in iron and steel and signs of slower demand from the consumer sector. | |
| “Yet the news wasn’t wholly negative, with bright spots including transport equipment doing well thanks to a backlog of aircraft orders and manufacturers still maintain some, albeit muted, confidence about their longer-term business prospects.” | |
| •An alert to this story said the UK economy had “contracted”. That should have read “slowed”. |