UK economy grew 0.4% in February amid Covid-19 lockdown – business live | Business

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The UK economy returned to modest growth in February, but remains sharply below its pre-pandemic peak amid the third Covid-19 lockdown.

Figures just released by the Office for National Statistics show that UK GDP rose by 0.4% in February, having shrunk in January.

Growth was led by the production sector and construction, with the large services sector only expanding modestly due to pandemic restrictions.

That leaves the economy around 7.8% below the levels seen in February 2020.

The ONS says:

  • UK gross domestic product (GDP) is estimated to have grown by 0.4% in February 2021, as government restrictions affecting economic activity remained broadly unchanged.
  • The service sector grew by 0.2% in February 2021, as wholesale and retail trade sales picked up a little but, overall, consumer-facing services industries remain well below pre-pandemic (February 2020) levels.
  • Output in the production sector grew by 1.0% in February 2021, as manufacturing grew 1.3% following contraction in January.
  • The construction sector grew by 1.6% in February 2021, driven by growth in both new work and repair and maintenance.

The ONS has also revised January’s data – to show that the economy only shrank by 2.2%, up from a contraction of 2.9% estimated originally.

Office for National Statistics (ONS)

GDP grew 0.4% in February but remained 7.8% below its pre-pandemic peak.

Services were up 0.2% (8.8% below), manufacturing up 1.3% (4.2% below) and construction grew 1.6% (4.3% below)

April 13, 2021

Office for National Statistics (ONS)

Commenting on #GDP figures for February, an ONS Spokesperson said:

April 13, 2021

More details and reaction to follow…

Also coming up today

Investors are bracing for the latest US inflation report, due today, which may show signs that America’s economic recovery is pushing up the cost of living.

US consumer prices are tipped to have risen by 0.5% in March, partly due to higher energy prices, pushing the annual inflation rate up to 2.5%, from 1.7% in February.

A strong inflation reading will reignite concerns that America central bank could ease back on its stimulus package sooner than planned (although Federal Reserve chair Jerome Powell has played down such concerns before…).

Ipek Ozkardeskaya, senior analyst at Swissquote, explains:

The market reaction to the inflation data will of course depend on the strength of the data, but also on how much investors are ready to buy into Jerome Powell’s prediction that higher inflation won’t last long enough to compromise the Federal Reserve’s (Fed) inflation target of an average of 2%. Jerome Powell will continue repeating that inflation is not an issue in the longer run.

If there is a chance that an acceleration to 2.5% is already priced in, and could be stomached by an average investor, a release above 2.5% could spur panic, and the Fed hawks, push the US yields and the US dollar higher, and send the US stock indices, especially the teck stocks lower. The major US indices closed Monday’s session slightly lower, with tech stocks leading losses. Activity on US futures hint that investors do not walk serenely into the data release.

Traders are also digesting strong trade data from China overnight, which showed that exports rose over 30% year-on-year in March, with imports soaring 38%.

That’s the fastest rise in imports in four years – a signal that the Chinese domestic economy is strengthening, as global demand picks up.


#China trade data in March, chart @BloombergTV

April 13, 2021

The agenda

  • 7am BST: UK GDP report for February
  • 10am BST: ZEW survey of German economic confidence
  • 1.30pm BST: US inflation report for March
  • 2pm BST: NIESR Monthly tracker of UK GDP for March


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