The UK's GDP unexpectedly increased by 0.1% in August, and the expansion of manufacturing hedged the weak service sector

The Zhitong Finance App learned that the UK economy grew by 0.1% in the month ending August, which was better than expected. Growth in the production sector offset the impact of weak output in the service and construction industries.

The economists surveyed had predicted that the UK GDP would shrink by 0.1% between July and August. However, this data still marks a slowdown in the UK's GDP growth momentum, which previously grew by 0.4% month-on-month in June and July.

According to data released by the UK Office for National Statistics (ONS) on Thursday, the production sector grew by 0.8% in August, the service sector grew at zero, and the construction industry declined by 0.2%.

On a year-on-year basis, GDP grew by 2.1% in August, higher than economists' expectations of 1.7%. According to ONS, this is the highest year-on-year increase in GDP since August 2022.

After the data was released, the pound jumped 0.4% against the US dollar, and the yield on British government bonds (that is, treasury bonds) declined across the board. The yield on the benchmark 10-year treasury bond recently fell 9 basis points to 5.3364%.

As a net importer of energy, the UK is currently mired in a cost of living crisis caused by sticky inflation and soaring energy costs caused by the Russian-Ukrainian conflict and the war with Iran.

The government will announce the much-anticipated fall budget later this month. Its task is to fulfill promises to mitigate the impact of soaring consumer costs while adhering to the previous administration's so-called fiscal rules aimed at curbing public debt.