UK economic activity falls

Date : 14 June 2022

ONS has released its latest monthly GDP estimate for April, raising concerns of an economic contraction over Q2.

UK economic output in April 2022 was down 0.3% month-on-month. Output in March was down 0.1% month-on-month, so a contraction may be gathering pace.

All main sectors (services, manufacturing and production) of the economy contributed negatively for the first time since January 2021. Of the main sectors, production saw the largest fall, due to inflationary pressures and supply chain issues.

One of the largest contributors to the negative economic growth was in human health and social work activities as the UK’s Test and Trace system was wound down over the month.

Wholesale and retail trade was the largest positive contributor, up 2.7% over the month. This is up from -2.8% the previous month. This was primarily driven by a 15.2% rise in the trade and repair of motor vehicles and motorcycles, as supply chain issues in the automotive industry eased.

This latest monthly estimate will be concerning for policy makers as it increases the possibility of the UK entering into recession in 2022. As the cost-of-living crisis continues to worsen in the face of higher prices, further weak economic data is now to be expected over the year.

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