UK economy shrank in November, ending six months of growth
The UK economy shrank 2.6 per cent in November as the second national lockdown was implemented, ending the six month run of consecutive increases, according to the Office for National Statistics (ONS).
November Gross Domestic Product (GDP) fell back to 8.5 per cent below the levels seen in February 2020 compared with 6.1 per cent below in October 2020.
In the 12 months to November 2020, GDP fell 8.9 per cent, compared with an annual decline of 6.8 per cent to October.
The ONS noted that the services sector was the main drag on output, falling 3.4 per cent as a result of curbs on activity as the government announced further lockdown measures to prevent the spread of coronavirus.
The largest contributor to this fall was accommodation and food service activities, followed by wholesale and retail trade, arts, entertainment and recreation. These sectors accounted for nearly 80 per cent of the fall in services.
All in all, the services sector is now 9.9 per cent below the level of February 2020.
Growth in construction
Construction and manufacturing were the only sectors to see growth in the month, reporting a 1.9 per cent and 0.7 per cent increase respectively.
Construction recorded its seventh month of consecutive growth, showing it was largely unaffected by the lockdown restrictions.
The ONS said the monthly growth was driven by increases in both infrastructure (9.6 per cent) and private new housing (4.7 per cent) meaning both sectors are above their pre-pandemic February 2020 levels at 9.1 per cent and 4.2 per cent respectively.
The largest contribution to manufacturing came from the motor vehicles industry, which is now 1.3 per cent above its February pre-pandemic level.
Ayush Ansal, chief investment officer at Crimson Black Capital, said: “The fall in GDP in November wasn’t quite as bad as some had expected given the fact the economic shutters had once again been pulled down in England.
“Unsurprisingly, the sectors dragging down the economy included retail, food services, accommodation, entertainment and the arts, all of which were among the hardest hit.
“If Spring’s economic collapse sank a sabre-tooth fang into the GDP graph, it’s clear there are plenty more sharp teeth to come as the economy stop-starts.
“Markets have priced in a jagged recovery and are now looking along the curve to how the economy reacts to mass vaccination. All eyes now are on the future rather than the past.”