United Kingdom: Economic activity growth ebbs in August
October 9, 2020
GDP expanded 2.1% on a calendar-adjusted month-on-month basis in August (July: +6.4% mom), amid softer growth in industrial production, construction and services. The slowdown was to be expected given several months of rapid recovery, and GDP is now 9.2% below its pre-Covid-19 level.
On a rolling quarterly basis, GDP grew 8.0% in June-August, rebounding notably from May-July’s 6.8% fall and marking the best result on record.
Looking ahead, the economy is set to slow sharply heading into Q4 following the announcement of new lockdown measures in early October, which will hit the hospitality sector in particular. The sagging labor market and Brexit uncertainty will further weigh on momentum.
According to economists at Berenberg:
“[A] robust Q3 gives way to serious virus risks […] Amid mounting restrictions, and in line with our latest revisions to the Eurozone outlook, we downgrade our Q4 call to 2.0% qoq from 2.5% previously.”
Author: Oliver Reynolds, Economist