COVID-19: Restaurants, bars and festivals helped economy pick up in August after rules eased
By SEAMLESS DAILY
13 October 2021
"The economy picked up in August as bars, restaurants and festivals benefited from the first full month without Covid-19 restrictions in England," said Darren Morgan, director of economic statistics at the ONS.
Gross domestic product ( GDP ) increased by 0.4 % month-on-month, according to the Office for National Statistics ( ONS )- slightly below experts' average forecast of 0.5 % growth.
Expert says 'relax' amid reports of negative PCR tests after positive lateral flow- COVID latest That was after revisions to data from sectors including car manufacturing- an industry which has been badly hit by the global shortage of semiconductor chips.
Overall, the ONS said the economy remained 0.8 % below its pre-pandemic level in August.
"This was offset by falls in health activity with fewer people visiting GPs and less testing and tracing.
"However, later and slightly weaker data from a number of industries now mean we estimate the economy fell a little overall in July."
Production output – which includes manufacturing, energy and mining – grew by 0.8 % amid an increase in crude petroleum and natural gas output after recent temporary maintenance closures at an oilfield.
Kitty Ussher, chief economist at the Institute of Directors, said : "August was a strong month for the UK economy, with the easing of restrictions and staycation boom causing a welcome growth in the service sector when compared with the previous month.
Paul Dales, chief UK economist at Capital Economics, said that for the third quarter from July-September, growth may have fallen short of the Bank of England's forecast- suggesting this could dampen prospects for an interest rate hike.
There was also more demand for hotels and campsites.
The ONS said economic growth fell by 0.1 % in July compared with initial estimates of 0.1 % growth.
Challenges from soaring prices and shortages of materials including steel, concrete, timber and glass hit the construction sector, with output falling by 0.2 % in August after a 1 % drop in July.
"such drags may have become more widespread and significant in september and october, with the fuel crisis preventing some people from getting to work,"
The latest snapshot showed activity in the accommodation and food service sectors, as well as arts, entertainment and recreation, contributed most to growth in the UK's dominant service sector, which makes up about 80 % of the British economy.
Paul Craig, a portfolio manager at Quilter Investors, said supply problems would no doubt weaken growth expectations for the months ahead as disruption caused by the coronavirus and Brexit dragged on the economy.
The relatively sluggish growth in July and August compared to some estimates means that the economy is still 0.8 per cent below its level before the pandemic hit, in February 2020, according to the ONS.
These global issues have been exacerbated by acute labour shortages in the UK as the result of fewer EU migrants in areas such as HGV drivers.
More recent survey data suggests that ongoing problems with sourcing materials will constrain growth well into the winter.
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