07:47 AM EDT, 09/11/2024 (MT Newswires) -- The United Kingdom's July gross domestic product print of Wednesday was "disappointing," said Sanjay Raja, the UK chief economist at Deutsche Bank Research.

Despite the modest boost from the Euros, the UK saw broad-based weakness across the economy, with services activity coming in softer at 0.1% month over month, production output contracting by 0.8% month over month and construction output falling by 0.4% month over month.

On the services side, the weakness in output can be traced directly to one thing: professional, scientific and technical activities, which fell by 1.3% month over month. The ONS reported large falls in advertising and market research (-4.9% moth over month), architectural and engineering activities (-3.9% month over month), and technical testing and analysis.

Consumer-facing services, however, was perhaps the only bright side of the economy, which expanded by 0.3% month over month, on the back of stronger retail spending.

On the production side, it was manufacturing (-1% month over month), electricity/natural gas (-1.7% month over month) and water/waste management (-0.7% month over month) that pulled output lower.

For the manufacturing sector in particular, the ONS reported falls in seven out of the 13 subsectors in July -- with the largest negative contribution coming from transport equipment (-2.3% month over month) due in large part to a slowdown in car production as factories prepared for their annual summer reset. We will likely see some revisions here given the lower response rates from businesses in July -- this will increase as more responses are received, noted Raja.

Big picture, Wednesday's data marks a second consecutive flat GDP reading for the UK economy. Growth is normalizing from the rapid pace set in H1 2024 -- this much should be expected, added the Deutsche Bank economist. The pace of the slowdown, however, is a little faster than the bank anticipated -- especially in light of the still stellar survey data it has seen over the summer.

Accordingly, Deutsche Bank's GDP nowcast for Q3 2024 has slipped "meaningfully." From seeing upside risks to Q3 GDP growth, relative to the bank's baseline of 0.4% quarter over quarter, it now sees downside risks building given the weaker-than-expected GDP print.