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UK GDP grows more than expected in July, buoyed by services, construction

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UK GDP grows more than expected in July, buoyed by services, construction

The U.K. economy grew at its fastest pace in a year in the three months to July, driven by growth in the services and construction sectors.

GDP grew by 0.6% in the three months to July, slightly higher than the Econoday consensus estimate of 0.5% and marking the highest rate of growth since August 2017. On a month-over-month basis, GDP grew by 0.3% in July after growing by 0.1% in June.

"Services grew particularly strongly, with retail sales performing well, boosted by warm weather and the World Cup. The construction sector also bounced back after a weak start to the year," said Rob Kent-Smith, head of GDP at the Office for National Statistics.

Services output grew by 0.6% in the three months to July, with the wholesale, retail and motor trade sector making the largest contribution to growth during the period. Construction output increased by 3.3% in the three-month period, driven by growth in repair and maintenance and all new work.

Industrial production, meanwhile, fell by 0.5% in the three months to July, mainly due to a decrease in electricity and gas supply as higher-than-average temperatures led to less demand. Manufacturing output edged down by 0.1% amid a fall in machinery and equipment and metal products.

"Despite all the doom and gloom surrounding the economy, the toxic political backdrop and Brexit uncertainty, Britain is supposedly booming based on July data," commented ING Chief International Economist James Knightley, who noted that the latest data also supports the Bank of England's rate hike in August.