GP visits, advertising spend and reopening hospitality venues helped the economy grow in the fifth month running into June
- on breaking: UK economy Q2. back to development
- GDP grew 4.8% in April-June, after a 1.6% contraction in Q1
- Q2. Household spending up 7.3% in
- Faster than expected growth in June, up 1%
- ONS: The economy is making a strong comeback
- But… the economy is still 2.2% smaller in June than in February 2020
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Unexpectedly strong 1.0% growth in June was a welcome surprise, suggesting that the recovery at the end of the second quarter has maintained a higher-than-expected pace, says Ruth Gregory of Capital Economics.
The upward surprise came from services output, which jumped 1.5% m/m (consensus 0.9% m/m), leaving it just 2.1% below its pre-crisis level.
Healthcare contributed the most to services production, but food and beverage service activities also grew by 10.1% m/m in June. Meanwhile, a 0.2% m/m gain in the manufacturing sector, leaving production in that sector 2.3% below its pre-crisis level. Unfortunately, little progress was made elsewhere in June. Industrial production declined 0.7% m/m as activity was once again affected by the planned closure of oilfield production sites.
CapEco on UK GDP:
Overall, we are comfortable with our outlook that monthly GDP will return to its February 2020 pre-pandemic size by October and the economy may still surprise most forecasters by emerging from the pandemic without any damage.
8.43 am bst
Today’s GDP report also shows that the company’s investments rose slightly in April-June, but remain well below pre-crisis levels.
Business investment grew 2.4% in Q2, leaving it 15% below its level in the fourth quarter of 2019.
Consumers went back to newly reopened shops, pubs and restaurants for a second time, driving consumer spending higher by 7.3 percent q/q and the government’s continued support for the economy meant a 6.1 percent q/q in government spending increased by.
However, business investment grew by only a relatively small 2.4 percent q/q.