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THE UK’s economy grew in the three months to June but slowed on the first quarter of the year.

The latest figures from the Office for National Statistics (ONS) reveal Gross Domestic Product (GDP) grew by 0.3% between April and June.

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This is lower than the 0.7% recorded between January and March, but stronger than expected by analysts.

GDP grew in the second quarter of the year mostly due to the services and construction sectors.

It’s worth bearing in mind these latest quarterly figures are estimations and are open to be revised at a later date.

Liz McKeown, director of economic statistics at the ONS, said: “Growth slowed in the second quarter after a strong start to the year.

“The economy was weak across April and May, with some activity having been brought forward to February and March ahead of Stamp Duty and tariff changes, but then recovered strongly in June.

“Across the second quarter as a whole growth was led by services, with computer programming, health and vehicle leasing growing.

“Construction also increased while production fell back slightly.

“Growth for the quarter was also boosted by updated source data for April, which while still showing a contraction, was better than initially estimated.

“Services also drove growth in June with scientific R&D, engineering and car sales all having a strong month.

“Within production, which recovered, manufacture of electronics performed especially well.”

The data today was largely expected by analysts to show the UK economy slowed to just 0.1% growth in the second quarter of 2025 after a strong start to the year.

Last Thursday, the Bank of England forecast second-quarter UK GDP growth of 0.1%, slowed from 0.7% in the first quarter.

Figures have already shown that GDP contracted by 0.3% in April and 0.1% in May.

Plus, figures on Tuesday showed the UK jobs market weakened again, but overall wage growth remains strong, prompting traders to trim their bets on the possibility of another Bank of England rate cut this year.

What it means for your money

GDP measures the economic output of companies, individuals and Governments.

If it is rising steadily, but not too much, it’s a sign of a healthy and prosperous economy.

This is because it usually means people are spending more, the Government gets more tax and businesses get more money which then means pay rises for workers.

When GDP is falling, it means the economy is shrinking which can be bad news for businesses and workers who face pay cuts or even losing their job.

The Bank of England (BoE) also uses GDP and inflation as key indicators when determining the base rate.

This decides how much it will charge banks to lend them money and is a way to try to control inflation and the economy.

If GDP is low, the BoE cuts its base rate in order to encourage people to spend and invest money.

If it is higher, the BoE may keep its base rate higher in order to keep inflation in check.

The Bank of England is prepared to make larger interest rate cuts if the job market shows signs of slowing down, its governor has said.

In an interview with the Times, Andrew Bailey said “I really do believe the path is downward” on interest rates.

Interest rates currently stand at 4.25% and will be reviewed at the Bank’s next meeting on 7 August, when many economists expect the rate will be cut.

They affect mortgage, credit card and savings rates for millions of people.

Speaking to the Times, Mr Bailey said the UK’s economy was growing behind its potential, opening up “slack” that would help to bring down ­inflation.

The governor said there were consistent signs that businesses were “adjusting employment and hours” and were giving smaller pay rises following UK Chancellor Rachel Reeve’s move to increase employers’ national insurance contributions.

Reeves raised national insurance rates for employers from 13.8% to 15% in April this year, in a move the government estimated would generate £25bn a year.

The latest official figures show the number of job vacancies in the UK has dropped to 736,000 over the three months to May – its lowest level since 2021 when firms had halted hiring during the Covid pandemic.

Meanwhile, the number of people available for work has jumped at its fastest pace since the pandemic, according to a survey from auditor KPMG and the Recruitment and Employment Confederation trade body.

“I think the path [for interest rates] is down. I really do believe the path is downward,” the governor said.

“But we continue to use the words ‘gradual and careful’ because… some people say to me ‘why are you cutting when inflation’s above target?”‘ he added.

Louise Dudley, portfolio manager at investor Federated Hermes, told the BBC’s Today programme that Mr Bailey’s comments suggested a rate cut was likely “sooner rather than later”.

Interest rates were left unchanged during the Bank’s last meeting in June, following two cuts earlier in the year.

During that meeting, Mr Bailey also said interest rates would take a “gradual downward path”.

The UK economy contracted by 0.1% in May, after also shrinking in April, according to the Office for National Statistics (ONS).

The unexpected dip was mainly driven by a drop in manufacturing, while retail sales were also “very weak”, said the ONS.

Employers in the United States have slowed hiring even though they added a solid 139,000 jobs in May.

While that was higher than the forecast of 133,000 jobs, it was lower than the 147,000 hires in April,  Labor Department data released on Friday showed. It also sharply revised downward the data for March and April by 95,000 jobs.

The US Labor Department said the biggest gains were in the healthcare industry which added 62,000 jobs; followed by the leisure and hospitality sector which added 48,000, 30,000 of which were in food services.

The social services sector followed suit, adding about 16,000 jobs. The federal government contracted 22,000 jobs.

Industries including manufacturing, wholesale trade, retail trade, transportation and warehousing showed little change as tariff anticipation spending slowed.

The unemployment rate held steady at 4.2 percent. Wages ticked up slightly. The average wage grew by 15 cents or 0.4 percent.

“The job market is steadily but surely throttling back. Monthly job gains are moderating, and most telling, the gains are being consistently revised lower, and not by a little bit. Indeed, after revision, monthly job gains appear to be closing in on 100,000,” Mark Zandi, chief economist at Moody’s Analytics, told Al Jazeera.

“It [the jobs report] does signal the job market and economy are increasingly fragile as the fallout from the global trade war intensifies.”

Private payrolls also tumbled this month, according to payroll firm ADP in a report on Wednesday, which showed the US economy added only 37,000 jobs, the lowest in two years. Unlike the Labor Department report which lags by a few weeks, this report is more immediate.

“After a strong start to the year, hiring is losing momentum,” Nela Richardson, chief economist at ADP, said in a release.

What was particularly notable about the ADP report was the set of industries with net job losses. The manufacturing sector recorded a net loss of 3,000. Natural resources and the mining industry lost 5,000. Those losses in the goods-producing sectors were offset by a job gain of 6,000 in construction.

The only substantive gains were in the leisure and hospitality sector, a notoriously low-paying sector, which added 38,000, according to ADP. Financial services followed in the gains, adding 18,000 jobs. However, those gains were offset by losses, including in education and health, which cut 13,000 jobs. The trade and transportation and utilities sector cut 4,000 jobs.

Last month, the ADP report showed 62,000 jobs were added, in stark contrast to the Labor Department’s 147,000, because it is considered a more immediate measure.

Job openings and labour turnover 

On Tuesday, the job openings and labour turnover survey or JOLTS report, which captures data at a significant lag to the Labor Department and ADP, showed there were 7.4 million open jobs in April, up roughly 191,000 from the month before.

But just because jobs are open does not mean they are being filled, according to Elise Gould, senior economist at the Economic Policy Institute.

“I think that reflects some cautiousness on the part of both employers and workers,” Gould told Al Jazeera.

While job openings in sectors like trade, transportation and utilities increased, hiring actually decreased.

This comes as major employers have implemented hiring slowdowns and freezes across sectors.

American Airlines reportedly put in place a hiring freeze for flight attendants in April amid uncertainty in the travel market. The financial services company T Rowe Price slowed down its hiring. And amid a slowdown in research grants, universities have put in place hiring freezes, most recently Johns Hopkins University, which currently has 600 National Institutes of Health-funded medical research projects under way.

As Al Jazeera has previously reported, small businesses said because of the looming tariffs, they’ve had to implement hiring freezes.

Hiring for small businesses declined in May by 4.4 percent compared with this time last year, according to Homebase, a payroll service provider for more than 150,000 small businesses accounting for roughly 3.8 million workers.

To forecast what to expect in the jobs market moving forward, EPI’s Gould suggests a close watch on key indicators including housing starts and factory orders, which indicate that manufacturers and construction companies will need to cut jobs if trends continue.

“Some of the government data [like the jobs and JOLTS report] takes a lot longer to sort of see trouble to catch that turning point and you might see it in the other measures a little bit faster, but there’s also a lot of volatility in them,” Gould said.

In April, residential home construction declined by 0.9 percent, the third straight month of declines, suggesting a pullback that indicates both builders and consumers are wary about building new homes and making improvements. At the same time, orders for goods made in US factories fell by 3.7 percent in April, according to the Census Bureau.