(RTTNews) - Friday, a preliminary estimate from the Office for National Statistics, or ONS showed that the UK economy contracted 0.5% in the third quarter from the prior quarter compared with zero growth in the second quarter. This was the first contraction since 1992. The ONS said “It has been 64 periods since the last period of negative growth in 1992 Q2.”

Economists had expected just 0.2% sequential fall in the third quarter.

The economy expanded 0.3% year-on-year in the third quarter, much slower than a 1.5% rise seen in the second quarter. The annual growth rate also stood below the expected 0.5%.

The slowdown was the result of reduced services and production activity. The output volume in the production industries was down 1% sequentially in the third quarter, while services output declined 0.4%. The decline in total production was mainly driven by a 1% fall in manufacturing output. Meanwhile, output within construction dropped 0.8%.

According to economists, growth was hit by higher inflation, which hurt household real incomes and firms’ profits. Further, tighter credit condition also weighed down economic activity. Most economists forecast a mild recession for the UK economy.

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