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Livesquawk - UK Economy Grew Solidly In November Before Omicron Wave Hit
UK Economy Grew Solidly In November Before Omicron Wave Hit

 

- Economic activity surprised to the upside in November 

- Level of output rose beyond pre-pandemic level for first time 

- Monthly expansion was broad-based across main sectors 

- Signs supply chain disruption easing for some businesses 

- Effects of Omicron likely capped new year growth  

 

 

By Harry Daniels 

LiveSquawk News 

@HarryDaniels71 

  

14 January 2021|11:30 GMT 

 

LONDON - UK growth finally reclaimed pre-pandemic level status in the penultimate month of 2021 to put in a strong, broad-based performance before the arrival of the Omicron variant.  

 

GDP growth rose 0.9% in November, stronger than the 0.4% expected, and above last month’s 0.1%. All four main sectors contributed to the positive read, led by services.  

 

The Office for National Statistics said services output grew by 0.7% in November, with 8 of the 14 sub-sectors surpassing pre-covid levels. ONS’ chief economist Grant Fitzner said architects, retailers, couriers, and accountants all had “a bumper month”. Output in consumer-facing services grew 0.8%, driven mainly by a 1.4% increase in retail trade. 

 

Production output was another significant positive. Output increased 1.0% on the month, exceeding the 0.2% forecast and reversing two months of negative reads; manufacturing rose 1.1%. The breakdown showed the distribution of gas grew 5.1% following five consecutive months of contraction. 

 

Sandra Horsfield of Investec said, “Altogether, this is a strong report all round, and not only in a backward-looking sense. The tentative signs of easing supply chain disruptions, in particular, are positive, not just for growth going ahead, but also because this may in time take some of the wind out of the current strong inflationary pressure.” 

 

The easing in shortages was most evident within the construction sector, which grew 3.5% month-on-month. The ONS said the rise in monthly output was driven solely by an increase in new work (5.7%), while repair and maintenance saw a slight decline, decreasing 0.2%. 

 

Analysts were quick to temper the good news. “As far as activity is concerned, it is almost a given that near-term momentum will fade: the spread of Omicron, and the change in consumer behaviour it has entailed on top of the direct disruptions to output due to the number of people taken ill, looks likely to temporarily hold back activity in December and especially in January,” noted Horsfield. “But today’s data set a good basis from which to weather this storm and lay the foundations for a strong recovery in output in the spring.”