December 10th: most UK sectors still lagging December 2019 levels
The figures for economic output (GDP) for October 2021 are out. As I speculated in an earlier blog, the bounce back hasn’t been as robust as people were hoping a couple of weeks ago. According to the ONS, GDP is estimated to have grown by only 0.1% in October. The FT puts this down to, among other things, supply chain issues.
As in any complex system, the slowdown in recovery is likely a combination of a large number of different factors, partly feeding on each other. Interestingly, clues to this were already partly visible in the slower return to shopping, eating out, and work indicated by mobility data (see, e.g., panel 5 here). Labour shortages weighing on supply, inflation eating into demand, continued elevated uncertainty, and so on, offer lots of reasons to be cautious about the economy in the short term. [There are some potential positive signs for the medium term, for example on productivity and skills.]
One of my go-to charts to get a handle on this is my regular monthly #dataisbeatiful “GDP rollercoaster” pictured above (also, animated for fun here. It’s starting to get a bit crowded, but I think is still quite useful. To get a closer look at the detail, do go to the zoomable and “hoverable” version on Tableau Public here. By October 2021, only two sub-sectors in the private sector had output higher than December 2019: wholesale and retail, and water and sewerage.
Many other large sectors of the economy have been flatlining for a while now, and even dipped in October 2021. Perhaps more concerning than the dip in construction and manufacturing is, in my view, the lack of continued recovery in several important service sectors, such as financial services and ICT. As I’ve mentioned before, these are hugely important growth engines for the UK and were, thank goodness, relatively robust throughout the COVID-19 crisis.