UK economic growth exceeds expectations, driven by health and construction

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UK economic growth exceeded expectations in September and narrowed the gap with pre-pandemic levels, supported by strong activity in the construction and healthcare sectors.

Gross domestic product rose by a monthly rate of 0.6 percent in September, compared with an expansion of 0.2 percent in August, according to data from the Office for National Statistics on Thursday.

The September figure was stronger than the 0.4 percent forecast by economists interviewed by Reuters.

Production was 0.6% below February 2020 levels, before the pandemic, suggesting that the economy has largely recovered from the blow of Covid-19 restrictions. The Chinese economy surpassed its pre-pandemic level last year and the United States did the same in the second quarter.

In the three months to September, UK output grew by 1.3 per cent, slower than the 1.5 per cent forecast by the Bank of England, due to downward revisions to both August and July data. Growth slowed from the 5.5% expansion seen in the second quarter, when it was buoyed by the reopening of most businesses.

GDP index line chart, February 2020 = 100 showing UK economy closing gap with pre-pandemic levels

The Bank of England expects growth to slow to 1% in the third quarter, reflecting supply chain disruptions and the impact of rising inflation on business and household spending.

Service production grew 0.7 per cent in September, buoyed by healthcare activity and a sharp increase in face-to-face appointments at doctors’ offices in England.

Production declined by 0.4 percent, mainly due to a 4.1 percent drop in gas distribution, the fourth consecutive monthly decline after exceptionally high production levels in May, when adverse weather conditions increased l ‘offering.

Construction has returned to strong growth after two months of contraction.

ONS chief economist Grant Fitzner said “growth picked up in September,” adding that the latest increase was driven by the healthcare sector, while lawyers also had a busy month as homebuyers rushed. to complete purchases before the end of the stamp duty holiday.

However, growth in these sectors was partially offset by declines in automobile production and sales.

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