British economy staged a modest recovery from the lockdown induced slump from April and according to the Office for National Statistics the (GDP) grew by 1.8% in May. The GDP crashed by a fifth during the first full month of lockdown. After the biggest collapse in activity since records began, economists had expected some recovery in activity in May. However, the bounce back was weaker than a 5.5% growth rate forecast by City economists.
With thousands of companies forced to close temporarily to limit the spread of the virus, Britain’s dominant services sector – which makes up about 80% of the economy – grew by just 0.9% on the month, dragged down by falling levels of activity in arts, entertainment and recreation, as well as at estate agents and IT firms.
Manufacturing and construction grew by more than 8% from the level of economic output in April, as activity at factories and on building sites began to recover with physical distancing measures in place. Despite the gradual return to growth, the level of GDP did not recover from record declines in activity in March and April as the global health emergency led to widespread shutdowns in activity, with GDP about 24.5% lower compared with February.
The ONS said the economy shrank by 19% over the three month period to the end of May, as government restrictions on movement dramatically reduced economic activity. Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: “Manufacturing and house building showed signs of recovery as some businesses saw staff return to work. Despite this, the economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck.
“In the important services sector, we saw some pickup in retail, which saw record online sales. However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines.”
