UK Oct GDP Sees Modest Growth As Services Hit By Restrictions

OCT GDP +0.4% M/M (PREV +1.1%), -8.2% Y/Y (PREV -8.4%)

OCT INDEX OF SERVICES +0.2% M/M; -8.8% Y/Y; PRV +1.0% M/M, MED +0.3%

OCT IND PRODUCTION +1.3% M/M, PRV +0.5%, MED +0.3%

OCT MANUFACTURING +1.7% M/M, PRV +0.2%, MEDIAN +0.3%

OCT CONSTRUCTION +1.0% M/M, PRV +2.9%, MEDIAN +1.1%

The recovery of UK economic growth continued in Oct with m/m GDP rising by 0.4%, stronger than market expectations (BBG: 0.0%). This marks the sixth consecutive m/m gain and GDP is now 23.4% higher than in Apr, but still 7.9% lower than before the pandemic. Annual growth improved marginally to -8.2% in Oct, following Sep's reading of -8.4%. Industrial production grew by 1.3% m/m, beating market expectations looking for a smaller uptick of 0.3%. The main driver for the increase in IP was the car industry with transport equipment up 6.8% m/m due to an uptick in both foreign and domestic demand. Construction output ticked up 1.0% in Oct, showing the smallest growth rate since the recovery began in May. Services slowed markedly, only rising by 0.2% which was mainly due to a sharp decline in the hospitality sector. Accommodation and food services saw the largest fall since Apr and dropped by 14.4% in Oct, shaving off 0.37pp from GDP growth. The ONS noted that the reintroduction of some restrictions hit mainly the service sector which led to modest growth overall.