Summer socialising perks up economy
However, the economy is still 0.8% lower than where it was in February 2020, before the pandemic began to take its toll, according to the Office for National Statistics (ONS).
August was the first full month where there were no coronavirus restrictions in England. The August 2021 growth in GDP was led by a month-on-month rise of 0.3% in services, although this sector remained 0.6% below its February 2020 level.
The sectors providing the strongest contribution were accommodation and food services (contributing 0.28 percentage points of positive growth to GDP); arts, entertainment and recreation, and information and communication (both contributing 0.13 percentage points of positive growth to GDP). These were offset by a fall in the health sector (contributing 0.42 percentage points of negative growth to GDP).
Darren Morgan, ONS director of economic statistics, said: “The economy picked up in August as bars, restaurants and festivals benefited from the first full month without Covid-19 restrictions in England. This was offset by falls in health activity with fewer people visiting GPs and less testing and tracing.”
The ONS found that the sports, amusement and recreation industry has recovered to the extent that it has now risen above its February 2020 level. The growth comes from theme parks and amusement parks, and the return of fans to football matches.
Derrick Dunne, CEO of YOU Asset Management, said: “With the ONS recording a 0.4% increase in GDP for August, it would be tempting to think that growth may be back on an upward trajectory, but investors should be taking today’s figures with a pinch of salt.
“Sectors like accommodation, food services and entertainment fared the best as infection rates fell and people rushed to socialise with family and friends, however the current picture is somewhat less rosy. The UK is faced with a supply chain crunch, rising prices and labour shortages, all of which could create a drag on GDP growth as we move towards the usually busy festive period.”
Sukhdeep Dhillon, senior economist at BNP Paribas Real Estate, said: “August’s GDP figures mark a small improvement on the 0.1% the month before. The ‘pingdemic’ resulted in a large chunk of the workforce self-isolating, which had a knock-on effect in July. In August most of these factors have receded, but the supply-demand imbalances, where demand is recovering much faster than supply, remain prevalent which continue to restrict recovery.”