September Pick-up – Business Live. Despite, UK economy grew 1.3% in Q3 as recovery slows

The UK economy picked up in September… after a halt in growth in the first quarter.

UK GDP is forecast to grow by 0.6% in September – stronger than expected.

But unfortunately, GDP growth for July has been revised downwards from a 0.1% decline to 0.2%, while August’s projected growth has been cut from 0.4% to just 0.2%.

This leaves the UK economy 0.6% smaller than in February 2020, on the ONS’ monthly estimates for the economy [closer to its pre-pandemic levels than the quarter-on-quarte data.

A large rise in face-to-face appointments at GP surgeries in England boosted activity.

Services output grew by 0.7% in September 2021, with human health activities growing by 6.4%. But output in consumer-facing services fell by 0.6% mainly because of a 13.3% fall in the wholesale and retail trade and repair of motor vehicles and motorcycles.

Production output decreased by 0.4% in September 2021, which the ONS attribute to:

…a 4.1% fall in the distribution of gas, its fourth consecutive monthly fall following exceptionally high output levels in May 2021 when adverse weather conditions boosted supply.

Construction output increased by 1.3% in September 2021, after shrinking in July and August.

Britain’s services sector drove the recovery in Q3, with manufacturing and builders both struggling.

Services, which makes up about three-quarters of the economy, grew by 1.6% in Q3 — with growth slowing after a 6.5% bounceback in Q2.

Accommodation and food services rose by 30% in the quarter, while the arts, entertainment and recreation services increased by 19.6%.

Production output only rose by 0.8% in Quarter 3 2021.

And there was a 0.3% decline in manufacturing output in Quarter 3 2021, partly due problems in the car industry where semiconductor shortages are hitting output:

The ON says:

The manufacture of transport equipment saw a 0.9% fall, which partly reflects a sharp decline of 8.2% in the manufacture of motor vehicles in September 2021, the largest fall since May 2021.

Construction output shrank by 1.5% in Quarter 3 2021, after four consecutive quarterly increases.

Household consumption made the largest contribution to expenditure in the July-September quarter, the ONS adds.

But companies ran down their inventories, likely reflecting some of the recent supply chain challenges, and there was a negative contribution to growth from net trade, it adds.

It’s official: The UK economic recovery slowed in the third quarter of the year

UK GDP rose by 1.3% in the July-September quarter, the Office for National Statistics reports, a little weaker than the 1.5% expected by economists.

That’s down from the 5.5% growth recorded in the second quarter, when the easing of Covid-19 restrictions led to a strong recovery.

It leaves the level of quarterly GDP still 2.1% below its levels in the last quarter of 2019, before the pandemic began.

The largest contributors to output growth in Q3 were in the hospitality, arts and recreation and health following the further easing of restrictions and reopening of the economy.

More to follow….

The recovery in UK private sector activity has looked sluggish recently, cautions Adam Cole of RBC Capital Markets in his predictions for today’s GDP report:

The monthly GDP outturns for July and August of -0.1% m/m and 0.4% m/m, respectively, had already caused our economists to downgrade Q3 GDP expectations.

For September, we look for GDP to expand at 0.3% m/m. The higher-frequency data pointed to the sluggishness of the recovery in private sector activity seen in July and August continuing. A monthly outturn for September in line with our expectations would leave growth for the third quarter as a whole at 1.4% q/q—a significant slowing from the 5.5% q/q pace recorded in Q2 as the economy reopened following the winter January/February lockdown.

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Today we discover how the UK economy performed in September, and across the third quarter of the year.

Preliminary GDP figures released at 7am UK time are expected to show a slowdown in Q3, with growth of around 1.5% in July-September, down from 5.5% in April-June.

That would confirm that the initial burst of activity in Q2 as lockdown restrictions were eased has faded, as worker shortages and the summer ‘pingdemic’ hit companies.

For September alone, economists forecast growth of around 0.4%. That would match the uptick in August when the boom in domestic holidays fuelled a rebound, led by the food, accommodation and leisure industries.

That would lift the economy closer to its pre-pandemic levels.