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UK economic growth slowed to 1.3% in Q3, down from 5.5% in the second quarter of the year.
According to the latest figures from the Office of National Statistics (ONS), the level of quarterly GDP is now 2.1% below where it was before the coronavirus pandemic at Quarter 4 (Oct to Dec) 2019.
In output terms, the largest contributors to this increase were from hospitality, arts and recreation and health following the further easing of restrictions and reopening of the economy.
Over the quarter, revised estimates show that GDP fell in July by 0.2% and saw a “modest pickup” in August (0.2%). The ONS added there was more of a rebound in September (0.6%) which was driven by services output growth of 0.7%, as human health activities “increased strongly”.
It added that in Q3, household consumption made the largest contribution to expenditure; there was a fall in underlying inventories, “likely reflecting some of the recent supply chain challenges, and a negative contribution from net trade”.
The ONS also revealed a 2.5% fall in wholesale and retail trade output, which it said was driven by “weak consumer spending”. The retail sales index found that sales volume fell across Quarter 3 2021, falling in July (-2.9%), August (-0.6%) and September (-0.2%).
Commenting on the figures, Dan Boardman-Weston, CIO at BRI Wealth Management, said: “UK GDP came in slightly soft for the third quarter of this year compared to analyst expectations and far weaker than the Q2 figures. The weakness compared to Q2 is less relevant given the country was rebounding after lockdown and so the figures were really quite strong then.
“The slight weakness this quarter can be seen in manufacturing and construction and was undoubtedly exacerbated by material and labour shortages. The overall picture is quite cautious given lingering uncertainties over a winter Covid resurgence, high levels of inflation and supply chain disruption.”
He added: “It’s understandable that the Bank of England wishes to gather more evidence before raising rates to combat inflation. Raising rates in the face of a slowing economic activity could do real harm to the nascent yet fragile post Covid economy.”
