Economic Review – September 2021
The Office for National Statistics (ONS)
has revised UK economic growth for Q2
2021 to 5.5% from an original estimate
of 4.8%. The UK’s level of GDP is now
3.3% below where it was pre-pandemic
in Q4 2019, revised from the previous
estimate of 4.4% below.
Other ONS data indicates a loss
of momentum more recently, with
the economy growing by 0.1% in July.
Although this represents a sixth successive
month of growth, the figure was
lower than June’s 1.4% rise and below
the 0.6% average forecast predicted in a
Reuters poll of economists.
July’s slowdown partly reflects an
upsurge in COVID cases and the resulting
‘pingdemic’, with ONS saying some
businesses complained of staff being
unable to attend work due to self-isolation
requirements. Additionally, analysts
said the slowdown highlighted the
impact of supply chain disruptions.
More recent survey data also shows
supply chain issues continue to weigh on
the recovery. The closely watched IHS
Markit/CIPS flash composite Purchasing
Managers’ Index (PMI), for instance, fell
from 54.8 in August to 54.1 in September.
While any reading above 50 does
still imply growth, this was a fourth
consecutive monthly decline, signalling
a loss of momentum across the UK
private sector.
IHS Markit’s Chief Business Economist
Chris Williamson said, “The survey also
points to business activity being increasingly
constrained by shortages of materials
and labour, most notably in the manufacturing
sector but also in some services
firms. A lack of staff and components
were especially widely cited as causing
falls in output within the food, drink and
vehicle manufacturing sectors.”