UK GDP grows 0.4% in August but remains 0.8% down on pre-pandemic level

The UK GDP is estimated to have grown by 0.4% in August but still remains 0.8% below its pre-pandemic level from February 2020, new figures published by the Office for National (ONS) have revealed.

This follows July’s GDP growth figure which the ONS has revised from 0.1% growth to a 0.1% fall, due to downwardly revised data for the manufacture of motor vehicles, oil and gas, and improvements to how health output is measured.

Overall, GDP grew by 2.9% in the three months to August, which the ONS suggested was mainly due to the performance of the services sector.

Services output grew by 0.3% in August with output in consumer-facing services increasing by 1.2%. Production output also increased by 0.8% during the month although the construction sector contracted in August, with output down by 0.2%. The construction sector is now 1.5% below its pre-pandemic level.

Commenting on the figures, Quilter Investor portfolio manager, Paul Craig, said: “While the UK economy did register a degree of growth in August, at a modest 0.4% it is clear the economic recovery is not quite in full swing and output remains 0.8% off pre-pandemic levels. The ONS also announced that the economy actually shrank in July, down by 0.1% rather than the 0.1% growth originally announced last month.

“Leisure and entertainment sectors, and other consumer-facing service sectors bounced back strongly in August, the first full month after July’s ‘freedom day’ in the UK. But this was offset by falls in other sectors of the economy. Most notably, a fall in the construction sector and a fall in the healthcare activity sector.

“The creaking UK economy is taking its time to spring back to life. The problems lie now not with demand but with supply. Acute labour shortages in several pockets of the economy along with chronic skills shortages have the potential to frustrate the economic recovery, and could well dampen any expectations for a strong economic revival over the winter months.”

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