Gross National Product (GDP) was up by 2.1% during the month, according to data from the Office for National Statistics (ONS).
It was the fourth consecutive month of growth, after the economy took a serious hit during the depths of the Covid-19 pandemic.
But it is less than half of what experts had expected, and a major slowdown since July.
Analysts expected that GDP would increase by 4.6%, according to a consensus taken by Pantheon Macroeconomics.
In July, GDP was up by 6.4%, and in June it rose by 9.1%, according to ONS data.
The Government invested hundreds of millions of pounds to get the economy back on its feet in August, including promising to pay for half a restaurant bill during parts of the month.
ONS deputy national statistician for economic statistics Jonathan Athow said: “The economy continued to recover in August but by less than in recent months.
“There was strong growth in restaurants and accommodation due to the easing of lockdown rules, the Eat Out To Help Out scheme, and people choosing summer ‘staycations’.
He added: “However, many other parts of the service sector recorded muted growth.
“Construction also continued its recovery, with a significant boost from housebuilding.
“There was limited growth in manufacturing, which remains down on its pre-pandemic level, with car and aircraft production still much lower than the start of the year.”