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GDP Monthly Estimate: August 2020

Monthly Gross Domestic Product (GDP) rose by 2.1% in August, following July’s rise of 6.4% and a 9.1% uplift in June. GDP is still 9.2% lower than the level seen before the full impact of the pandemic in February but is 21.7% above April’s low.

UK GDP growth, Quarter 1 (Jan to Mar) 2005 until June to August 2020

Source: ONS

GDP rose by 8.0% in the three months to August 2020, with all main sectors of the economy recording a rise. Indeed, the services sector rose by 7.1%, production by 9.3% and construction by 18.5%.

Breakdown of GDP and its sub-sectors, rolling three month growth rates and contributions to growth, June to August 2020

Source: ONS

Services

Services output rose by 2.1% on a monthly basis in August, although is still 9.6% below the pre Covid-19 level in February 2020. Significant contributions to the increase came from accommodation and food services, notably from food and beverage service activities (+69.7%) supported by the Eat Out to Help Out scheme while the easing of restrictions supported the accommodations industry (+76.0%) boosted by ‘staycations’. Combined, these two sub-categories contributed 1.25 percentage points to the monthly rise of 2.1%.

On a three-month rolling basis, services output rose by 7.1% from the 7.1% decline in July. Notably the rise was driven by retail trade (+17.9%) and education (+16.4%).

Production

Production output increased by 0.3% in August 2020, with manufacturing growing by 0.7%. Despite the rise, production output remains 6.0% lower than the level in February 2020.

In the three months to August, production output rose by 9.3% following a 3.0% fall in July. All four sub-sectors recorded a rise: manufacturing (+11.3%), electricity, gas, steam and air conditioning supply (+5.0%), mining and quarrying (+6.0%) and water supply (+3.6%).

Construction

Construction output rose by 3.0% on a month-on-month basis in August, slowing on the previous month. This was driven by new housing, notably in private housing (18.1% weight in construction) which rose by 12.8%. The construction sector still remains 10.8% below the February 2020 level.

Construction output rose by 18.5% in the quarter to August, driven by private new housing which grew by a record 34.9%.

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