Despite a good performance by the health sector and second-hand vehicle sales, the UK economy increased by just 0.1 percent in October, according to official estimates.
Growth was lower than projected due to a drop in persons eating out and cutbacks in oil output and gas use.
The services sector, on the other hand, has recovered to pre-pandemic levels, according to the Office for National Statistics (ONS).
According to the ONS, the economy is still 0.5 percent behind pre-pandemic levels.
Because of the weaker growth, the Bank of England is expected to keep interest rates unchanged next week.
Given the current economic numbers and uncertainties surrounding the Omicron coronavirus type, Susannah Streeter, senior investing and markets analyst at Hargreaves Lansdown, said that while a rate hike couldn’t be fully ruled out, “most bets are off that the Bank will push them up so soon.”
Unless new Covid limitations were imposed, she claimed a rate hike in February was “more likely to be on the table” since “the inflation kettle is poised to be whistling loudly by then.”
The latest economic numbers, according to Liz Martins, UK economist at HSBC, were “a little bit weaker than predicted,” with experts expecting a 0.4 percent increase in October.
Despite the emergence of Omicron, which was mostly due to supply chain challenges and material and product shortages, she told Today that the “economy was faltering a little bit.”
“Growth is driven by public sector services, such as those GP appointments,” she noted. “So, there’s some private sector contraction here, no manufacturing growth, and a drop in construction.
“At least for the month of December, the recovery is on hold, and we expect to resume in the New Year.”
‘The steam has been taken out of the rehabilitation process.’
Coronavirus limitations, according to Maike Currie, investment director at Fidelity International, have “well and truly knocked the steam out of the UK economic recovery.”
“In October, supply chain concerns, personnel shortages, and rising inflation put the brakes on growth,” she said.
With concerns about the new Covid variant causing a “creeping sense of déjà vu,” Ms Currie warned that October could be the “closest the economy gets to reaching ‘normal levels’ until deep into 2022.”
The “continuing rise” of face-to-face appointments at GP surgeries in England, according to the ONS, explains the robust services output.
What is Gross Domestic Product (GDP) and how does it effect me?
The Gross Domestic Product, or GDP, is one of the most important indicators of an economy’s health.
It’s a way of measuring – or attempting to measure – all of a company’s, government’s, and individual’s activity in a given economy.
New GDP data are released every month in the United Kingdom, but the quarterly figures, which cover three months at a time, are the most closely watched.
In a growing economy, quarterly GDP will be slightly higher than the previous quarter, indicating that people are working harder and becoming (on average) wealthier.
“The UK health sector increased substantially again,” stated ONS chief economist Grant Fitzner, “while second-hand car sales and employment agencies also bolstered the economy.”
Mr Fitzner, on the other hand, said the construction industry had experienced its worst decrease since April 2020, with “notable falls in house building and infrastructure activity, “partly driven by raw material shortages.” “..
Though the health sector was the primary driver of service growth in October, other areas such as tourism and entertainment also saw growth.
Chancellor of the Exchequer, Rishi Sunak, responded to the findings by saying the government has “always understood there could be obstacles on our route to recovery.”
“We’re still rebounding faster than projected,” he added, “with more personnel on payrolls than ever before and low redundancies.”
