Britain's factories have helped drive unexpected economic growth, with manufacturing output surging as the UK economy proved more resilient than economists had forecast.
Gross domestic product (GDP) grew by 0.1% in August, according to the Office for National Statistics (ONS), beating economists' expectations of a 0.1% contraction.
The surprise expansion was driven largely by the production sector, which grew by 0.8% during the month - its fastest rate of growth in nine months, in what some commentators have called a 'Burnham boost'.
Manufacturing was a major contributor, with output rising by 1.2%, helped by growth in the pharmaceutical sector.
The figures offer a boost to the economy ahead of the autumn Budget, although they also show that growth has slowed following stronger performance earlier in the summer.
The economy expanded by 0.4% in July, while the ONS revised its estimate for June upwards from 0.3% to 0.4%.
Manufacturing leads the way as factory output rises
The latest figures highlight the importance of Britain's manufacturing sector in keeping the economy growing.
Production output increased by 0.8% in August, with manufacturing rising by 1.2% as pharmaceutical production provided a lift.
The strength of the sector helped the economy avoid the monthly contraction economists had expected, despite pressure on household spending and uncertainty in the global economy.
However, not every part of the economy performed as well. The services sector, which accounts for a major share of UK economic activity, was flat in August after strong growth during the previous two months.
There was strength in motor vehicle sales, but bars and restaurants recorded a 2.7% monthly decline.
Construction also remained under pressure, shrinking by a further 0.2% in August amid the impact of high mortgage rates.
UK economy grows 0.7% over three months
Looking beyond the monthly figures, the economy grew by 0.7% in the three months to August.
ONS director of economic statistics Liz McKeown said: “GDP growth showed further strength in the latest three months, led by the services sector, while both production and construction fell.”
The figures suggest the UK economy has shown resilience during the first part of the year, despite global uncertainty and higher energy costs.
However, economists have warned that rising inflation and tighter financial conditions could make it harder to sustain growth towards the end of 2026.
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Yael Selfin, chief economist at KPMG, said: “The UK economy had shown considerable strength in the first eight months of the year, despite significant external headwinds from the Iran conflict and higher energy prices.
“However, households now face renewed pressure from rising wholesale natural gas prices and higher long-term interest rates, which could weigh on activity over the coming months.
“Against this backdrop, the Chancellor may feel inclined to take a cautious approach at the upcoming Budget, keeping net borrowing on a declining path as a share of GDP whilst avoiding major tax rises.”
Ben Jones, senior lead economist at the CBI, said: “The economy has generally performed well so far this year.
“But amid rising inflation and tightening financial conditions, maintaining that momentum does look difficult, with a more subdued end to 2026 in prospect.”
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