UK Economy Grows 0.7% in Third Quarter as Services Lead Expansion

The UK economy grew by 0.7% in the third quarter of 2026, accelerating from 0.5% in the previous three months as business-facing services supplied much of the expansion. Construction remained a weak spot, while the wider production sector posted only a modest increase.

The July-to-September result extended a run of quarterly growth that began with a 0.6% increase in the first three months of the year. Output was 1.9% higher than in the third quarter of 2025, according to figures released Thursday by the Office for National Statistics (ONS). The figures measure inflation-adjusted output, rather than changes in prices.

The ONS’s first quarterly GDP estimate also put growth per person at 0.7% for the quarter and 1.7% over the year. Those measures point to an increase in average economic output, though GDP per person is not the same as disposable income or a direct measure of how households are doing.

Business services drive most of the increase

Services output rose 0.9% in the third quarter, up from a 0.6% increase in the second. Eleven of the sector’s 14 subsectors made a positive contribution, and services production stood 2.3% above its level a year earlier. Business-facing services grew by 1.0%, twice the 0.5% increase recorded by consumer-facing activities.

Administrative and support services were an important part of the gain, expanding 4.1% during the quarter. Rental and leasing activities within that category rose 6.6%. Information and communication output increased 2.1%, supported by a 4.4% rise in computer programming, consultancy and related activities.

Computer programming, consultancy and related activities have been the largest driver of GDP growth across 2026, according to ONS data. The statistical agency said many businesses reporting particularly strong turnover growth operate in fields connected with artificial intelligence and cloud computing, but it cautioned that its data cannot isolate an exact contribution from those activities.

Professional, scientific and technical businesses also helped lift output. The gains were not universal: education declined 0.5%, as did accommodation and food services. Within the latter, food and beverage services output fell 1.9%. The contrast suggests activity was stronger among firms selling expertise and support to other businesses than in some parts of the consumer economy.

Manufacturing improves, but housing construction falls

Outside services, the production sector grew just 0.1%, after a 0.1% decline in the second quarter. Manufacturing was the only one of its four broad subsectors to register growth, increasing 0.9%. Computer, electronic and optical product manufacturing rose 4.6%, the largest positive contributor to manufacturing’s quarterly expansion.

Other parts of production moved in the opposite direction. Mining and quarrying output fell 2.2%, and electricity, gas, steam and air-conditioning supply declined 2.1%. The overall production increase was therefore limited even as some technology-related manufacturing activities improved.

Construction output fell 0.7% in the quarter and was 1.7% below the level recorded a year earlier. New construction work contracted 1.6%, led by a 4.7% drop in private housing new work. Repair and maintenance grew 0.5%, including a 1.5% rise in private housing repair and maintenance, but that was not enough to offset the fall in new projects.

The spending side of the national accounts was stronger than the construction data alone might suggest. Inflation-adjusted household consumption rose 0.6%, with transport and housing among the sources of growth. Government consumption also increased 0.6%, reflecting higher activity in areas including public administration, defence and health.

Gross fixed capital formation, a broad measure of investment in long-lived assets, increased 1.7%. The ONS identified machinery and transport equipment as important drivers. Business investment, a component of that wider measure, rose by a more restrained 0.4%. The broader investment figure therefore reflects a faster increase in overall fixed-asset spending than in the narrower business-investment measure.

Trade added another mixed signal. Export volumes grew 1.6% and imports increased 1.8% during the quarter. The ONS estimated the combined goods-and-services trade deficit at 1.3% of nominal GDP.

September growth follows a flat August

The quarterly expansion was not evenly distributed across its three months. GDP rose 0.4% in July, was unchanged in August and increased 0.2% in September. August’s figure was revised down from an earlier estimate of 0.1% growth, while the July number was unchanged. Monthly output was growing more slowly by September than it had in July, despite the stronger quarterly result.

In September itself, all three principal output sectors grew. Services and production rose 0.2% and 0.3%, respectively, and construction increased 0.8%. The monthly improvement in construction does not erase the decline across the full quarter, because the two comparisons cover different periods.

The ONS classifies the 0.7% quarterly result as an initial estimate. It did not revise previously published quarterly GDP figures in Thursday’s release, but the agency notes that early estimates can change as more detailed information becomes available. Its analysis of historical revisions since 2000 shows an average absolute change of 0.27 percentage points between an initial quarterly estimate and the figure available three years later.

The next monthly GDP estimate, covering October, is scheduled for December 11. A fuller set of quarterly national accounts for July to September is due on December 22, when more comprehensive information may alter the initial assessment of the economy’s third-quarter performance.