MNI DATA IMPACT: UK Oct GDP Slows As Hospitality Sector Slumps

UK GDP expanded by its slowest pace since the economy bottomed in April, but still managed to exceed expectations, courtesy of a buoyant manufacturing sector, data released on Thursday by the Office for National Statistics showed.

GDP rose by 0.4% in October over the previous month, the slowest pace since the economy returned to growth in May. However, the outturn exceeded analysts' expectations for October. Output remains 7.9% below pre-pandemic levels in February, and fell by 8.2% over the same month of 2019. GDP expanded by 10.2% on a rolling three-month basis, below the 15.5% pace recorded in September.

The service sector expanded by a paltry 0.2% in October, slightly less than expected, dampened by a 14.4% plunge in accommodation and food services, as regions of the UK entered economic lockdowns. That exceeds the 8.3% decline in hospitality recorded in September, after the government subsidies to the sector ended in August. Accommodation and food services account for 2.9% of GDP.

Manufacturing grew by 1.7% between September and October, far exceeding forecasts of a 0.3% gain. Car production jumped by 6.8% in October, fuelled by increased demand both domestically and for export. However, automobile output remains 15.7% below February levels and fell by 23.1% from October of 2019.

OUTPUT RECOVERING

Industrial production increased by 1.3% between September and October but fell by 5.5% on an annual basis, while construction rose by an as-expected 1.0% in October, declining by 7.5% over the same period of 2019.

Industrial production has made up the most ground since the recovery began in May, standing 4.4% below pre-pandemic levels. Manufacturing recovered to 6.6% below February's level by October, while construction was down 6.4% and services 8.6% lower.

Net trade fell into a deficit of GBP1.738 billion in October, the first shortfall since March, from a GBP613 million surplus in September. The goods deficit expanded to GBP22.210 billion from GBP9.348 billion, the biggest gap since April of 2019.

Excluding precious metals, which includes erratic trade in non-monetary gold, the deficit widened to GPB1.579 billion from GBP641 million in September, the biggest gap since March. The deficit in goods excluding precious metals expanded to GBP11.840 billion, the highest since April of 2019, from GPB10.602 billion in September.