The UK economy recovered more slowly than expected in July as the soaring cost of living continues to darken the outlook.
GDP grew 0.2pc in the month following a 0.6pc slump in June, when activity was hit by the extra bank holiday to mark the Platinum Jubilee, according to the Office for National Statistics.
However, that was behind the 0.3pc growth forecast by economists. Yael?Selfin, chief economist at KPMG, described the performance as "feeble".
She added: "More concerning, July's GDP remains below the level seen in May, pointing to an overall contraction over the first two months of summer."
The Bank of England has forecast that Britain will be tipped into recession as soaring energy bills and sky-high inflation dent demand.
The ONS said there was anecdotal evidence that people had begun to cut their energy consumption due to the sharp increase in prices.
Analysts at Deutsche Bank added that the death of Queen Elizabeth and another bank holiday for her funeral next week could be enough to spark a recession this quarter.
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Jake Finney, economist at PwC, says growth in the services sector helped to offset declines in both production and construction.
The UK economy grew by a modest 0.2pc on a month-on-month basis in July, following its 0.6pc contraction in June 2022.
However, looking beneath the headlines it's clear this positive growth rate was primarily led by the performance of the services sector. Two of the other main engines of economic growth - production and construction - contracted in July.
Consumer-facing services grew by 0.6pc in July, following a flat month in June. The sector was helped by record-high temperatures and one-off events, such as the UK's hosting of the Women's Euros and the Commonwealth games.
This saw the 'sports activities and amusement and recreation activities' sub-sector grow by 8.1pc. However, this strong growth rate was partially offset by a fall of 4.5pc in other personal service activities, in part owing to the cost-of-living crisis that is starting to weigh on consumer demand.
Despite today's positive growth figures, our expectation is that the UK economy will contract in Q3 2022, following its -0.1pc contraction in Q2 2022. This would mean that the UK enters a technical recession for the first time since lockdown restrictions ended.
With energy bills continuing to soar, it seems some Brits are starting to take action.
The ONS said there was anecdotal evidence that people had begun to cut their gas and electricity usage in response to the higher prices.
The Bank of England has previously warned that higher energy bills - alongside a wider cost-of-living crisis - would tip the UK into recession.
The FTSE 100 has started the week on the front foot, even as the latest GDP figures fell short of expectations.
The blue-chip index gained 0.5pc to 7,383 points.
Good morning.
We begin the week with more gloomy economic data as Britain edges further towards recession.
GDP expanded just 0.2pc in July after slumping 0.6pc in June due to the Platinum Jubilee bank holiday, according to new ONS stats.
That was weaker than expected, with Yael?Selfin, chief economist at KPMG, describing the performance as "feeble".
The figures highlight the challenge facing the economy as energy bills soar and inflation continues to climb.
Prime Minister Liz Truss last week unveiled a package of support measures estimated to cost more £100bn. While this should help to ease inflation slightly, the Bank of England has predicted the UK will be pushed into recession.
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Tokyo stocks opened higher, tracking rallies on Wall Street as investors came to terms with the prospect of more central bank interest rate hikes.
The benchmark Nikkei 225 index gained 1pc in early trade, while the broader Topix index was up 0.8pc.
The US dollar fetched 142.53 yen in early Asian trade, against 142.56 yen on Friday in New York.
Corporate: No scheduled updates
Economics: July GDP estimate and trade figures; construction output data (UK)