Economic growth slows to 0.5% in third quarter

Manufacturing output fell by 0.3% in the third quarter, according to the ONS

The Office for National Statistics (ONS) said the powerhouse services sector recorded growth of 0.7 per cent in the three months to September, while output in the construction sector fell by 2.2 per cent.

Within the production sector – which recorded growth of 0.3 per cent – manufacturing output fell by 0.3 per cent but the ONS said this was offset by a 2.4 per cent increase in mining and quarrying and a 1.2 per cent increase in water and waste management.

Overall, gross domestic product (GDP) was 2.3 per cent higher in the third quarter compared with the same period a year ago, according to today’s preliminary estimate.

Ben Brettell, senior economist at Hargreaves Lansdown, said: “The signs have been there for some time – the UK economy has been losing momentum. It’s important to remember this is only the first estimate of GDP – based on less than half of the data which will ultimately be available. Revisions to today’s figures are likely in the coming months.

“Weaker construction and manufacturing output are the primary reasons for the slowdown, which could prompt concerns that the UK economy’s reliance on the services sector is increasing further.”

Growth in the second quarter bounced back from a rate of 0.4 per cent at the start of the year, which was the weakest pace since the end of 2013.

GDP expectations for the year were recently marked down by the independent Office for Budget Responsibility from 2.5 to 2.4 per cent – following growth of 3 per cent in 2014 – after the unexpectedly slow start to the year.

During the third quarter, Britain’s construction sector shrank at its sharpest rate for almost three years in August, according to official data.

The Office for National Statistics added that although the country’s manufacturing output rose in August, it was down by 0.8 per cent year-on-year.

Earlier this month the International Monetary Fund warned that the risks of a global financial crash had increased as the slowdown in China and potential US rate rises threaten the stability of debt-laden emerging economies.