UK Economy Recovered from Pandemic Lows in March, Claims New ONS Data

Summary

• The national economy grew by 2.1 per cent in March.
• The growth was driven by sectors, such as education, retail, health, manufacturing, and construction.
• However, the British GDP shrank by 1.5 per cent during the first three month of 2021.

The UK economy grew by 2.1 per cent in March this year according to the latest data from the Office for National Statistics (ONS). It was the fastest monthly growth rate since August 2020. The push was aided by healthy growth in the retail, health, manufacturing and construction, education sectors as schools remained opened in England and Wales for the entire month of March.

Despite the growth, the overall level of monthly economic activity was 5.9 per cent below its pre-pandemic peak seen in February 2020. Also, the Reuters poll of analysts had expected a lower monthly growth of 1.3 per cent for March.

For the first three months of the year (Q1 2021), the economic output in Britain shrank by 1.5 per cent as compared to the same period last year. The nation was under strict lockdown to fight with the coronavirus disease during the first three months of the year.

While the services sector saw a growth of 1.9 per cent for March, production sector’s output expanded by 1.8 per cent for the same period.  The growth in the services was driven by strong activity in the health and retail sector. The economic activity in the construction sector was boosted by 5.8 per cent in March 2021 as new works and repair & maintenance activities accelerated the growth. Manufacturing sector’s activity was up by 2.1 per cent for the month.

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Also Read: UK Construction PMI Expands in April, Highest in Over 6 Years

Economic resilience to continue?

Rishi Sunak, Chancellor of the Exchequer, welcomed the GDP growth numbers for March and said that it was a promising sign of things to come in the near future. He added that the government would take all the required steps to support the economic recovery going forward.

Ana Boata, head - macroeconomic research of Euler Hermes, a trade credit insurance firm, said that companies and the government would sense that this data definitely marks a turning point in the British economic recovery post the pandemic. As the restrictions begin to ease out across the nation, this could very well be a beginning of healthy sustained growth for British businesses, added Boata.

Last week, the Bank of England (BoE) had said that the national economy was expected to grow by 7.25 per cent this year. The British GDP had slumped by 9.8 per cent last year, which was the deepest fall in the past three centuries. The BoE expects the British economy to return to its pre-pandemic size by the end of this year.

Also Read: US Economy Adds Record 1.8 Mn New Jobs in March As Hiring Slows 

Rising trade with the EU

Separate trade data from the ONS released on 12 May revealed that British exports with the European Union rose 8.6 per cent or by £1.0 billion in March, three months after it formally left the EU. On the other hand, the UK imports jumped 4.5 per cent by £0.8 billion (for the same month). The monthly growth in both imports as well as exports was driven by cars.

Darren Morgan, statistician, ONS said that the goods exported to the EU were in March were almost back to their December 2020 level.