GDP Q2 2022 Preliminary Estimate

GDP

UK quarterly GDP is estimated to have fallen 0.1% in Q2 2022 (April to June).
Output is 0.6% above its pre-pandemic level (Q4 2019) and 2.9% higher than Q2 2021.
On a monthly basis, GDP fell by 0.6% in June, following a 0.4% increase in May and 0.2% decline in April.

GDP growth for the G7 economies showed a mixed picture in Q2 2022

GDP breakdown by sector

Services

Services output fell by 0.4% in Q2 2022 and is now 1.1% above pre-pandemic levels. On a monthly basis, services declined 0.5% in June, following growth of 0.2% in May.
The largest negative contribution to services output resulted from human health and social work (-5.4%), as NHS Test and Trace activity ended, and COVID-19 vaccination volumes continued to tail off following the booster campaign.
There was a 1.0% fall in wholesale and retail trade. Retail sales volumes fell across the quarter amid inflationary pressures, while the Business Insights and Conditions Survey (BICS) highlighted that 32% of wholesale and retail businesses reported supply chain disruption.
The fall in services output was partially offset by strong growth in accommodation and food services (4.7%), as hospitality industries benefited from the extra bank holiday for the Queen’s Jubilee. There were also increases in arts, entertainment and recreation (3.3%), which had previously been impacted by COVID-19 restrictions.
Administrative and support service activities rose by 1.2% in Q2 2022 driven by an increase in travel agencies, tour operators and other related activities, benefitting from strong pent-up demand for holidays following the easing of COVID-19 restrictions.

Production

Production output rose 0.5% in Q2 2022 but remains 1.2% below its pre-pandemic level.
On a monthly basis, Production declined by 0.9% in June, reflecting a contraction of 1.6% in manufacturing.
In Q2 overall, growth in manufacturing was broadly flat. But there were falls in 7 of the 13 manufacturing sub-sectors, with many businesses impacted by ongoing shortages of components and input cost pressures.
Production growth in Q2 was primarily driven by a rise in electricity, gas, steam and air conditioning supply (2.7%), resulting from growth in the manufacture of gas; and electric power generation, transmission and distribution.
According to anecdotal evidence from the Department for Business, Energy and Industrial Strategy (BEIS), demand for electricity was increased because of the absence of COVID-19 restrictions that were in place last year.

Construction

Construction output increased by 2.3% in Q2 2022 and is now 2.7% above pre-pandemic levels. On a monthly basis, construction output fell 1.4% in June after 1.8% growth in May.
High prices for construction products, most notably concrete, plaster, bricks and asphalt-related products, continue to be an issue. The annual rate of all construction work price growth was 9.6% in June, a record high since the Construction Output Price Indices series began in 2014.
Despite these record prices, demand for work persists. Demand in value terms was 18.3% above pre-pandemic levels in June. In volume terms, it was only 2.9% above, after removing the impact of inflation.

Household consumption

In absolute terms, household consumption rose by 2.6% in Q2, but this was entirely driven by inflationary pressures on the value of spending.
Real household expenditure fell by 0.2% in Q2, driven by falls in clothing and footwear, food and non-alcoholic beverages, and restaurants and hotels. This was partially offset by rises in expenditure on essentials such as transport, housing and health.
The implied price of household expenditure increased by 7.3% when compared with Q2 last year, the highest annual increase since 1991.