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Dow Jones Newswires: U.K. economy picked up modestly in July

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The U.K. economy returned to growth in July after contracting the previous month, driven by a rebound in the services sector despite intensifying cost-of-living pressures.

Gross domestic product expanded by 0.2% on month, swinging from a 0.6% contraction in June, according to data from the Office for National Statistics released Monday.

Economists polled by The Wall Street Journal had expected the economy to expand by 0.3%.

The services sector was the main growth driver in July, while industrial production and construction output fell on month, the ONS said.

GDP was flat in the three months to July compared with the previous three months.

The U.K. economy is expected to slow down in the coming quarters as high inflation takes its toll on consumption and investment.

The Bank of England in August projected that the country’s economy would enter a recession at year-end. However, economists have said the government’s energy support package should tame price growth and support real incomes, significantly reducing the risk that the economy will fall into a deep recession.

Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com

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