Unemployment starts its anticipated upwards trajectory.
The ONS’ publication of August GDP all but confirmed a “square root” shaped recovery for Great Britain as the economy started to plateau. Growth was 2.1% in August, a sharp fall from 6.4% in July and 9.1% in June, and well below forecasters’ expectations of 4-5%. The result was surprising as the scene was set for a further strong recovery with low Coronavirus circulation and the Government’s July mini-budget providing a sugar-rush for benefitting sectors. A “V-shaped” recovery is now highly unlikely, and many commentators will be revising down their forecasts.
Nonetheless, two thirds of March and April’s fall in output has now been recovered. The economy remains 9% smaller compared to February: output is now at 2014 levels.
August’s result underlines the danger of relying on transient stimulus measures. A robust infrastructure to manage the virus, minimising fatalities while allowing as much normal activity to resume is now vitally important. The likelihood of activity inhibiting measures such as regional lockdowns are now all but certain. It appears that SAGE recommended a “circuit-breaker” mini lockdown four weeks ago among other measures that were not acted upon.
The Construction Sector – Awards values climb 21.2% in September as upward trend continues
According to the latest data release from ONS, construction output increased by 3.0% in August following 17.2% uplift in July and record 21.8% increase in June. Whilst the upward trend has been extremely positive since April 2020, overall construction output in August is still 10.8% lower than February 2020, immediately prior to the Covid-19 lockdown. Comparisons on a year ago show total construction output is 13.0% lower than August 2019 with new work 13.9% lower and repair & maintenance 11.3% lower than a year ago. With the exception of
infrastructure new work which showed annual increase of 1.3%, all other construction sectors showed output decreases compared with August 2019. The most notable of these were the private industrial sector showing output decline of 42.5% on a year ago with the private commercial sector down 22.0% and public sector new housing down 25.2%.