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UK GDP Growth Flattens In August

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The UK economy stagnated in August as the increase in industrial production was offset by a contraction in construction and farm sectors, the Office for National Statistics reported Wednesday.

Gross domestic product remained unchanged after expanding 0.4 percent in July. GDP was forecast to climb 0.2 percent.

Underpinned by the warm weather, the economy grew 0.7 percent in the three months to August from the previous three months, the same rate of growth as in July. These were the highest growth rates since February 2017, ONS said.

"The economy continued to rebound strongly after a weak spring, with retail, food and drink production and housebuilding all performing particularly well during the hot summer months," head of GDP Rob Kent-Smith said.

"However, long-term growth continues to lag behind its historical trend," Kent-Smith added.

Sunny weather has given UK growth a much-needed boost over the summer, but the combination of Brexit uncertainty and consumer caution suggests the economy faces a challenging autumn and winter, James Smith, an ING economist, said.

The dominant service sector also showed flat change in August versus July's 0.3 percent increase. Meanwhile, construction and farm output decreased 0.7 percent and 0.2 percent, respectively.

At the same time, industrial production grew 0.2 percent in August, but slower than the 0.4 percent increase seen a month ago. Meanwhile, manufacturing output shrank 0.2 percent after showing nil growth.

On a yearly basis, both industrial and manufacturing output grew 1.3 percent each. Economists had forecast industrial output to climb 1 percent, the same rate as posted in July.

Manufacturing output was expected to grow 1.1 percent versus 1.4 percent rise a month ago.

In a separate communiqué, the ONS said country's visible trade deficit widened to GBP 11.19 billion from GBP 10.38 billion in July. On the other hand, the surplus in the services trade grew to GBP 9.92 billion from GBP 9.81 billion.

As a result, total trade deficit widened to GBP 1.27 billion from GBP 572 million in the previous month.

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