UK Monthly GDP Falls As Lockdown Kicks In

JAN GDP -2.9% M/M (PREV +1.2%), -9.2% Y/Y (PREV -6.5%)

JAN INDEX OF SERVICES -3.5 % M/M; -10.4% Y/Y; PRV +1.7% M/M, MED -5.8%

JAN IND PRODUCTION -1.5% M/M, PRV +0.2%, MED -0.5%

JAN MANUFACTURING -2.3% M/M, PRV +0.3%, MEDIAN -0.8%

JAN CONSTRUCTION +0.9% M/M, PRV -2.9%, MEDIAN -1.0%

The national lockdown in Jan led to a sharp drop in m/m GDP, falling by 2.9%, coming in stronger than expected (BBG: -5.0%). This marks the lowest reading since Apr where GDP fell by 18.3% and it was slightly worse than Nov's 2.3% drop. The decrease was led by the service sector which contracted by 3.5% m/m. Within services, accommodation and food services saw the largest fall of 28.1%, while health services saw the largest uptick, up 5.9%, mainly driven by the vaccine rollout and increased testing. Other services, including hairdressers, plunged by 20.7%, while Education output dropped by 16.3% in Jan as schools remained closed. While industrial production slipped 1.5%, manufacturing output dropped 2.3%, both coming in weaker than anticipated. Both indicators show the first decline since Apr with car manufacturing decreasing significantly.

Imports and exports to the EU declined sharply in Jan due to temporary factors such as delivery delays, stockpiling, a change of reporting at the end of the transition period, etc. Early indicators suggest a recovery towards the end of the month.