The UK economy showed resilience in September with a growth rate of 0.2 per cent, driven by a rebound in the services sector following a revised decline in August. The construction sector also recorded its strongest performance since March, contributing to a robust third quarter. Household consumption and investment were the primary drivers of growth, with consumer-facing services expanding by 0.5 per cent in the latest quarter.
Looking ahead, the National Institute of Economic and Social Research (NIESR) forecasts a 0.4 per cent growth in the fourth quarter. While services are expected to maintain steady growth, the production sector may slow down. The report highlights elevated inflation expectations and a stabilizing labor market, despite higher energy prices.
Fergus Jimenez-England, an economist at NIESR, emphasized the need for the Bank of England to focus on containing inflation. He noted that current interest rates are not significantly dampening demand, and further rate rises may be necessary to prevent a costlier economic correction later. The upcoming pay round adds urgency to this approach.