UK gross domestic product (GDP) increased by 0.3% in the three months to August, following a jump of 0.2% in the three months to July.

Month-on-month, GDP increased by 0.1% in August, after falling by 0.1% in July.

In the three months to August, services output increased by 0.4%, while construction output jumped by 0.3%.

However, production output fell by 0.3%. This is a smaller decrease than in the three months to July, which fell by 1.4%.

Project consultant at Camarco, Aoife Mclarnon, said that this latest update follows a "string of downbeat indicators".

She added: "With retail sales lower than expected, disappointing house price data and pay growth slowing, we have seen downward pressure on gilt yields in recent days and increased speculation that bond markets may have mispriced the potential for interest rate cuts. Today’s data confirms that higher growth remains elusive, in what has been a prolonged period of mixed signals and false dawns."

Senior market analyst at Trade Nation, David Morrison, concluded: "This should offer some mild relief to Chancellor Rachel Reeves as she prepares for her budget next month. After all, some growth is better than no growth, which is better than a contraction.

"But GDP is notoriously fickle and subject to revision, so it’s not worth reading too much into today’s data. Sterling slipped a touch in the immediate aftermath of the release, but overall, the market reaction was muted."

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