GDP Q4 2021 Preliminary Estimate

UK monthly GDP fell by 0.2% in December amid Omicron

Source: ONS

Headline GDP

UK GDP is estimated to have increased by 1.0% in Q4 (Oct to Dec) 2021, following a downwardly revised 1.0% increase in Q3 (July to Sept).
The level of quarterly GDP in Q4 was 0.4% below its pre-coronavirus level (Q4 2019).
On a monthly basis, GDP fell by 0.2% in December 2021 – dragged by the impact of Omicron on services – but is at its pre-coronavirus level (February 2020).
Across the year, GDP increased by an estimated 7.5% in 2021, following a 9.4% fall in 2020.
In Q4, household consumption made the largest positive contribution to growth (excluding non-monetary gold in net trade).

GDP breakdown by sector

Services

Services output rose by 1.2% in Q4 and was 0.5% above levels two years ago. This was driven by human health and social work activities, but dragged by retail amid the emergence of the Omicron. This particularly weighed on services output in December, seeing services decline 0.5% in the month.
Wholesale and retail trade was the main contributor to December’s fall in services and fell by 3.2% in the month, impacted by retail trade down by 3.7% amid low footfall.
Accommodation and food service activities was the second largest contributor to December’s fall in services, down by 9.2% in the month. Almost half of businesses in accommodation and food services reported a rise in cancellations from customers in December according to the Business Insights and Conditions Survey.
The largest positive contributor to services growth in December was human health and social work activities, up 2.4%, driven by a large increase in the NHS Test and Trace and COVID-19 vaccination activities

Production

Production output fell by 0.4% in Q4 2021 and is now 3.6% below its pre-coronavirus levels. On a monthly basis, production output increased by 0.3% in December.
The fall in production output in Q4 was because of a 3.2% fall in electricity, gas, steam and air conditioning supply (energy) and a 4.5% fall in mining and quarrying.
Manufacturing output was broadly flat in the fourth quarter, with large increases in the manufacturing of pharmaceutical products and pharmaceutical preparations offset by falls in manufacturing of machinery and equipment amid supply issues.

Construction

Construction output increased by 1.0% in Q4 2021, following a fall of 1.4% Q3. On a monthly basis, construction output increased 2.0% in December and – following monthly revisions – was above its pre-pandemic level (February 2020) for the first time by 0.3%.
Across Q4, both new work and repair and maintenance contributed to the growth (+1.1% and +0.8% respectively).

Household consumption

In Q3, household consumption rose by 1.2% in Q4, but remains 0.4% below pre-coronavirus (COVID-19) levels.
This was driven by increased spending on transport, net tourism, and clothing and footwear. These were partially offset by a fall in restaurants and hotels expenditure in Q4, impacted by Omicron.