The UK economy expanded for the sixth straight month in October but the pace of growth weakened as restrictions to contain the Covid-19 spread weighed on the hospitality sector, data from the Office for National Statistics showed Thursday.
Gross domestic product climbed 0.4 percent month-on-month, as expected, but slower than the 1.1 percent growth seen in September. This was the sixth consecutive monthly growth.
October GDP was 23.4 percent higher than its April 2020 low. However, it remained 7.9 percent below the levels seen in February 2020, before the full impact of the coronavirus pandemic.
Ongoing tight ‘tiered’ restrictions mean the economy is unlikely to regain all of November’s lost output through December, and GDP is likely to end the year some 9-10 percent below pre-virus levels, James Smith, an ING economist said.
While a positive GDP figure remains the most likely outcome, the rising risk of another form of lockdown in the new year, combined with the initial disruption as UK-EU trade terms change (even with a deal), suggest the UK economy is far from out of the woods just yet – even as vaccine optimism raises hopes for a better performance through the latter parts of 2021, the economist added.
The production-side breakdown showed that slowdown in October was largely caused by the services activity. Services growth eased to 0.2 percent from 1 percent a month ago.
Construction output climbed 1 percent after rising 2.9 percent in the previous month. Meanwhile, growth in industrial output improved to 1.3 percent from 0.5 percent as manufacturing expanded 1.7 percent, following September’s 0.2 percent gain.
In October, GDP was down 8.2 percent annually, slower than the 8.4 percent fall registered in September.
Another report from the ONS showed that the visible trade gap rose to its highest level since May 2019 falling exports. The trade deficit widened to GBP 11.99 billion from GBP 9.34 billion in September.
Exports decreased 5.9 percent on month, while imports grew 2.8 percent in October.
The total trade deficit posted the deficit for the first time in seven months. The shortfall came in at GBP 1.74 billion versus a surplus of GBP 613 million in September.
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