UK September GDP surprises with 0.2% growth, supporting December rate hike expectations

• UK monthly GDP for September came in at +0.2%, against an expected 0.0%
• The previous month's reading was +0.1%, later revised down to 0.0%

The sectoral breakdown:

• Services output rose 0.2%, beating the forecast of 0.0% month-on-month
• The prior figure of 0.0% was revised to -0.1%
• Industrial output increased 0.3%, compared with an expected decline of 0.3%
• This follows a prior reading of +0.8%, revised to +0.7%
• Manufacturing output grew 0.7%, versus a forecast of -0.5% month-on-month
• The previous figure of +1.2% was revised down to +0.7%

The UK economy appears to have ended the third quarter with surprising resilience, as growth picked up in September. The better-than-expected data was driven by outperformance in the services sector, although August figures were revised lower. This brings quarterly GDP growth to 0.7%, matching preliminary estimates as noted in the earlier report.

Examining the details, positives were seen across the board, with services sector growth standing out. At the same time, industrial and manufacturing output also posted gains in September, defying expectations of contraction. That helped underpin the stronger economic mood as Q3 2026 closed.

A more detailed breakdown shows that 9 of the 14 subsectors in services expanded, with the largest positive contribution coming from real estate activities (+0.4%). The second-largest contribution came from transportation and storage (+1.4%).

Overall, this report is unlikely to shift the Bank of England's outlook, as policymakers continue to focus on the battle against inflation. With growth conditions still holding up, there are fewer headwinds for the BOE in justifying another rate increase in December before reassessing policy next year.

GBP/USD remains around 1.3260 on the day, down 0.1%, and has changed little from the data release. Traders had already priced in roughly 71% odds of a 25-basis-point rate hike for next month heading into today.