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The UK economy contracted in July, and a major contributing factor was wet weather hitting the construction sector.
UK gross domestic product shrank by 0.5% in July, Office for National Statistics data shows — more than the 0.2% forecast by analysts.
In light of the drop, Capital Economics suggested the UK may already be in recession, adding that expectations that the economy would grow by 0.4% in the third quarter would not be met.
The UK experienced the sixth-wettest July on record and the wettest since 2009, the Office for National Statistics reported, citing Met Office data. That, combined with cold weather, hit the construction and retail sectors.
Monthly construction output is estimated to have decreased by 0.5% in volume in July, the ONS said. This follows a 1.6% increase in June, which benefited from good weather and an additional working day over the previous month due to the additional bank holiday for King Charles III’s coronation in May. The retail sector shrank by 1.2% in July.
Commercial real estate investment values have fallen sharply in the UK in the past year due to rising interest rates. But so far, rental income has remained robust as businesses have continued to fare well. The prospect of recession would test the resiliency of that income.
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