The UK economy grew by 0.2% in August – in line with expectations, according to the Office for National Statistics.

“Our initial estimate suggests GDP grew a little in August, led by strong growth in services which was partially offset by falls in manufacturing and construction,” ONS director of economic statistics Darren Morgan said.

He added that the economy has also grown “modestly” over the past three months – mostly led by car manufacturing and sales as well as the construction sector.

But it wasn’t all good news from the Office for National Statistics, which announced that it has revised July’s gross domestic product (GDP) further downwards.

Early official figures had already suggested that strikes and a summer washout led to a worse-than-expected contraction of 0.5% – but the ONS now believes July’s GDP actually fell by 0.6%.

Chancellor Jeremy Hunt said: “The UK has grown faster than France and Germany since the pandemic and today’s data shows the economy is more resilient than expected. While this is a good sign, we still need to tackle inflation so we can unlock sustainable growth.”

Pantheon Macroeconomics says August’s GDP report should “becalm fears that the economy is on the cusp of recession” – with industrial action having less of an impact on the economy during the month.

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Overall, its analysts believe UK economic activity is on a “flat-to-slightly-rising trend” – and such modest growth shouldn’t stand in the way of the Bank of England keeping interest rates held at 5.25% in future meetings.

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Reacting to the latest figures, Pantheon said it is “touch and go” as to whether GDP dropped marginally in the third quarter of this year, and argued that a recession “remains unlikely”.

Striking an optimistic note, it estimated that households will see their real disposable income rise over the coming quarters – “albeit sluggishly” – because prices are now rising less quickly than wages.

It was a mixed bag in the services sector. Architects and engineers were among the big winners, with their sector growing by 4.7% over the course of August.

The education sector rose by 1.6% during the month, bouncing back from a 1.7% contraction in July that was partially caused by strikes.

But one of the biggest losers in the services sector was arts, entertainment and recreation, which shrank by 7.4%.

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