UK economy bounces back in August

The UK economy expanded by 0.2% in August, returning to growth but failing to make up for the ground lost by a significant downturn in July (-0.6%), as an expansion in the services sector offset declines in production and construction. However, the poor start to the quarter coupled with a sharp drop in retail sales in September suggests growth in Q3 as a whole is likely to be close to zero. Labour market data also points to softening activity, though assessing current conditions has been made harder as the ONS transitions to a new methodology for its labour market statistics. The latest labour market release nonetheless points to a cooling labour market, with the employment rate and vacancies falling, and unemployment and inactivity rates ticking up. But confidence in the reliability of this data is low. Meanwhile, the Bank of England has expressed concern about the quality of the offi