UK Economy Grows 0.7% in Third Quarter as Services Outpace Construction

Britain’s economy accelerated in the third quarter, supported by business services, while weaker housebuilding exposed an uneven recovery. New official figures also show a modest rise in investment and a September rebound in construction.

The Gherkin and neighbouring office towers in the City of London. — The City of London skyline. Archival context for reporting on UK economic activity. Photograph: Alev Takil / Unsplash.

The UK economy grew by 0.7% between July and September, accelerating from 0.5% in the previous quarter, according to the Office for National Statistics’ first estimate published on 12 November. Output was 1.9% higher than a year earlier, with services providing the main impetus.

GDP per person also increased by 0.7% during the quarter and by 1.7% over the year. That measure adjusts the size of the economy for population changes. It provides another perspective on growth, although an average across the population does not establish that every household experienced an equivalent improvement.

Business services lead the expansion

The services breakdown shows output rising by 0.9%, with increases in 11 of its 14 sectors. Administrative and support activities expanded by 4.1%, information and communication by 2.1%, and professional, scientific and technical activities by 1.6%. These were the main positive contributors within the sector.

The expansion nevertheless left some industries behind. Education and accommodation and food services each fell by 0.5% over the quarter. The contrast matters because a strong headline for services can coexist with difficult conditions in particular businesses, especially when business-facing activities and consumer demand develop at different speeds.

The monthly GDP figures also show that the quarter’s progress was uneven. September grew by 0.2%, following no growth in August and a 0.4% increase in July. August’s earlier estimate of 0.1% growth was revised down, underlining the provisional nature of the monthly readings.

Housing remains a weak point

Construction moved in the opposite direction over the quarter. The ONS construction release recorded a 0.7% decline, with new work down 1.6% and repair and maintenance up 0.5%. Private new housing fell by 4.7%, making it the largest negative contributor to the sector’s quarterly performance.

There was a brighter September reading: construction output rose by 0.8%, ending four consecutive monthly declines. Infrastructure new work increased by 3.3% on the month, while total new orders rose by 1.2% over the quarter. Those figures show an improvement in activity and the order pipeline, without yet establishing a sustained recovery.

Production output, which includes manufacturing alongside other industries, increased by only 0.1% over the quarter. Read alongside the larger services gain and the construction decline, the figures describe an economy advancing at different speeds. They do not support treating the headline GDP increase as a uniform improvement across all sectors.

Investment rises, with further revisions possible

Separate business investment estimates showed a 0.4% quarterly increase and a level 3.0% above the same period in 2025. These are inflation-adjusted figures, so the increase reflects a change in investment volumes rather than simply higher purchase prices. The quarterly pace was positive but modest.

The investment release carries its own measurement limits. The main capital expenditure survey had a 62.6% response rate for the provisional estimate. The ONS explains that large expenditure often arrives later in the collection process, meaning that subsequent releases can change the picture as more company returns become available.

Household-facing activity offers another useful check on the expansion. Consumer-facing services grew by 0.5% during the quarter, compared with 1.0% for services not directly facing consumers. The monthly release therefore points to business demand doing more of the work, rather than a consumer upswing matching the strength of other service industries.

The next monthly GDP release is scheduled for 11 December, followed by updated quarterly accounts on 22 December. Those releases will help establish whether September’s gains continued into the final quarter and whether the initial estimates change as the statistical office receives more complete information.