Britain's economy avoided recession in the third quarter, official data showed Monday, but there were signs of slowing activity before the country's general election next month and looming departure from the European Union.

Gross domestic product rebounded by 0.3 percent in the July-September period after a 0.2-percent contraction in the second quarter, the Office for National Statistics (ONS) said in an initial estimate.

The technical definition of a recession is two straight quarters of negative growth.

Britain faces a general election on December 12, called by Prime Minister Boris Johnson to try and finally force through Brexit by a new deadline of January 31.

"GDP grew steadily in the third quarter, mainly thanks to a strong July," an ONS spokesman said in a statement Monday.

"Services again led the way with construction also performing well.

"Manufacturing failed to grow as falls in most industries were offset by car production bouncing back," he added.

However, the third-quarter performance fell short of market expectations and the Bank of England's (BoE) growth forecast -- which had both stood at 0.4 percent.

And despite rebounding growth, the ONS pointed to possible trouble ahead.

A recovery in auto sector helped manufacturing avoid a slowdown A recovery in auto sector helped manufacturing avoid a slowdown Photo: AFP / ANDREW COWIE

"The underlying momentum in the UK economy shows some signs of slowing," the ONS added.

On an annual comparison, British GDP grew by 1.0 percent in the third quarter from a year earlier -- the weakest reading since the first three months of 2010.

Economic activity was propelled largely by the construction and services sectors, but the production sector turned flat.

"The UK dodged a technical recession, so overall the news is positive," noted CMC Markets analyst David Madden.

Monday's news of rebounding quarterly growth comes after the BoE tweaked its economic growth outlook.

The central bank last week upgraded its UK growth forecast to 1.4 percent in 2019 but downgraded 2020 guidance to 1.2 percent.

The new forecasts, which assume that Britain leaves the European Union with a deal on January 31, contrasted with prior predictions of 1.3 percent for both years.

The BoE also warned of "downside risks to the... projections from a weaker world outlook and from more persistent Brexit uncertainties affecting corporate and household spending".

In more downbeat news on Friday, credit ratings agency Moody's downgraded the outlook for Britain's debt -- and blamed mounting policy challenges amid the Brexit debate.

The agency cut the outlook to negative from stable but kept the debt at the investment grade Aa2.

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