By Joshua Kirby
The U.K. economy contracted more than expected in July, suggesting activity is cooling in the face of monetary tightening by the Bank of England.
Gross domestic product fell 0.5% compared with the previous month, data from the Office for National Statistics showed Wednesday. This missed forecasts for a shallower 0.2% fall in output, according to economists polled by The Wall Street Journal ahead of the release.
On an annual basis, the economy was flat in July, the figures showed. Economists had expected a 0.4% rise.
The contraction comes after the economy grew above expectations in the second quarter, driven by a stronger-than-expected services sector. The fallback in July suggests the Bank of England’s policy of raising interest rates is beginning to take some heat out of the U.K. economy.
The BOE will next week decide to meet whether to raise its benchmark rate again, past its current 5.25%, as it looks to ease rapid price inflation.
Unemployment figures earlier this week showed the U.K. jobless rate inching up in the three months to July, though wage growth remained steady in the same period.
Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby
This article was originally published by Marketwatch.com. Read the original article here.
