UK GDP grew 0.4% in August after hospitality boost

October 18, 2021

In our weekly Market Monday insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.

Figures from the Office for National Statistics showed the United Kingdom’s gross domestic product grew 0.4% in August, boosted by the full reopening of the hospitality sector.

Whilst still 0.8% lower than February 2020 - the last data available before the onset of the coronavirus pandemic - accommodation and food service activities, arts, entertainment and recreation were the top contributors to services growth in August. The ONS said accommodation and food service activities grew by 10.3 percent, while arts, entertainment and recreation grew by 8.5 percent.

The ONS also revised GDP for July 2021, amending it down from 0.1 percent growth to a 0.1 percent fall, due to a downward revision of data for the manufacture of motor vehicles, oil and gas, and improvements to how health output is measured.

Germany’s top five economic institutes slashed their forecast for economic growth in 2021 to 2.4% from a previous estimate of 3.7%, as supply chain bottlenecks curb manufacturing output. However, they said economic conditions would improve toward year-end and raised their forecast for 2022 growth significantly to 4.8% from 3.9%, as the impact of the coronavirus pandemic eases.

In the United States, evidence began to suggest that the drag on the economy from the delta variant of the coronavirus was easing. On Thursday, the S&P 500 Index recorded its biggest daily gain since March following news that weekly jobless claims had fallen to 293,000, a new pandemic-era low. Airline and cruise ship stocks rose after the White House announced an easing in border controls following the recent decline in coronavirus cases.

In its October economic outlook report, the Japanese government retained its overall assessment for the Japanese economy as continuing to pick up, pointing to signs of recovery in private consumption, but it said that the pace of recovery was slowing due to the severe situation caused by the coronavirus pandemic. However, the government stated that exports were “increasing at a slower pace,” instead of its previous assessment in September of exports “increasing moderately.”

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