GDP monthly estimate, UK: August 2021

Gross domestic product (GDP) measures the value of goods and services produced in the UK. It estimates the size of and growth in the economy.

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Cyswllt:
Email Ellis Best

Dyddiad y datganiad:
13 October 2021

Cyhoeddiad nesaf:
11 November 2021

1. Main points

  • Gross domestic product (GDP) is estimated to have grown by 0.4% in August 2021 and remains 0.8% below its pre-coronavirus (COVID-19) pandemic level (February 2020).

  • Services output grew by 0.3% in August 2021 with output in consumer-facing services increasing by 1.2%, while all other services rose by 0.1%; all other services are now 0.4% above their pre-pandemic levels, while consumer-facing services remain 4.7% below.

  • Accommodation and food service activities, and arts, entertainment and recreation contributed most positively to services growth in August 2021, partially offset by falls in health output and retail trade.

  • Production output increased by 0.8% in August 2021, mainly because of the continued increase in the extraction of crude petroleum and natural gas following the recent temporary closure of oil field production sites for planned maintenance.

  • Construction contracted, with output down by 0.2% in August 2021; the sector is now 1.5% below its pre-pandemic level.

  • GDP growth for July 2021 has been revised from 0.1% growth to a 0.1% fall; mainly because of downwardly revised data for the manufacture of motor vehicles, oil and gas, and improvements to how health output is measured.

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GDP estimates for August 2021 are subject to more uncertainty than usual as a result of the challenges we faced estimating GDP in the current conditions.

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2. Monthly GDP

Monthly real gross domestic product (GDP) grew by 0.4% in August 2021, after a revised 0.1% fall in July 2021 (revised down from 0.1% growth) following five consecutive months of growth (Figure 1) as coronavirus (COVID-19) restrictions eased to varying degrees in England, Scotland and Wales.

This is the first release in which July 2021 is open for revision, with estimates up to June 2021 consistent with revisions introduced as part of the Quarterly national accounts released on 30 September 2021.

Overall, GDP in August 2021 is 0.8% below its pre-coronavirus pandemic level (February 2020) with all sectors below their pre-pandemic level. Upward revisions to health (because of measurement improvements) and arts, entertainment and recreation (because of new Value Added Tax (VAT) data) are the main reasons for GDP levels now being closer to pre-pandemic levels, compared with previous estimates.

Overall, GDP grew by 2.9% in the three months to August 2021, mainly because of the performance of the services sector (Figure 2). This largely reflects the gradual reopening of accommodation and food service activities and a rise in underlying human health activities (for example, more GP appointments) compared with the previous three months (March to May 2021).

More about economy, business and jobs

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3. The services sector

Services output grew by 0.3% in August 2021 and remains 0.6% below its pre-coronavirus (COVID-19) pandemic level. This follows a fall of 0.1% in July 2021 (revised down from flat growth).

Output in consumer-facing services increased by 1.2% in August 2021, following a broadly flat July 2021 when it grew by 0.1% (Figure 3). Most of the growth in these services was because of a 5.9% increase in food and beverage service activities, and a 47.9% increase in travel agency, tour operator and other related reservation services (growing from historically low levels). Growth in consumer-facing services was partially offset by a 0.9% fall in retail trade and a 1.9% fall in the wholesale and retail trade and repair of motor vehicles.

Overall, consumer-facing services are 4.7% below their pre-pandemic levels, while all other services are now 0.4% above them.

Accommodation and food service activities was the main contributor to services growth in August 2021, growing by 10.3% (Figure 4). There was particularly strong growth in accommodation, which grew by 22.9% boosted by hotels and campsites, and growth of 5.9% in food and beverage service activities.

Arts, entertainment and recreation was the second-largest contributor to services growth, growing by 8.5% in August 2021, as creative, arts and entertainment activities grew by 24.7% in the first full month of coronavirus restrictions on social distancing being lifted in England, and later in Wales (from 7 August).

Information and communications also contributed positively to services growth, growing by 2.1% in the month, mainly because of a 2.6% growth in computer programming, consultancy and related activities. Elsewhere, air transport continued to expand as coronavirus-related travel restrictions eased, growing by 27.5% in August 2021, but remains 75.0% below its pre-pandemic level. Rail transport also saw strong growth, growing by 18.1% – but remains 37.7% below its pre-pandemic level.

Partially offsetting services growth was a 4.0% fall in human health and social work activities in August 2021, as GP appointments fell again following a high number of visits in June 2021. In addition, a fall in test and trace activity and vaccine numbers in August 2021 contributed negative 0.3 percentage points to gross domestic product (GDP) growth.

Taking into account NHS Test and Trace services and vaccine programmes

Coverage adjustments have been applied to the volume data to estimate the impact on GDP from the NHS Test and Trace services and COVID-19 vaccine programmes. Previously, adjustments (which are applied to both the government expenditure and output data, and only to volume data) were informed by the number of tests registered and vaccines administered, in-year spending data for the NHS Test and Trace service and estimated costs to secure and manufacture COVID-19 vaccines for the UK and the deployment of vaccines in England.

Now, we have improved how we estimate non-market output (that is, NHS Test and Trace services and the COVID-19 vaccine programme), incorporating new cost-weighted activity indicators. This change of method has resulted in mostly minor revisions to volumes, with our new volume estimates reaffirming the level of our early estimates. For further information, please refer to the accompanying article on Measuring the economic output of COVID-19 testing, tracing and vaccinations: April 2020 to June 2021.

The revised volume expenditure adjustments for January to August 2021 following the introduction of the new way of measuring non-market health output are set out in Table 2. The Test and Trace adjustment for August 2021 was £1,200 million, down from £1,600 million in July as the number of coronavirus tests fell by approximately 25%. The vaccine programme’s adjustment for August 2021 was £300 million, down from £400 million in July as the number of coronavirus vaccinations fell by approximately 15%. Note that these volume adjustments have been rounded to the nearest £100 million.

Overall, services grew by 3.7% in the three months to August 2021, and this mainly reflects the gradual reopening of accommodation and food service activities and a rise in underlying human health activities (for example, GP appointments) compared with the previous three months (March to May 2021).

More detailed breakdowns on services are available in the Index of Services, UK: August 2021, while more detail on the revisions prior to July 2021 can be found in GDP quarterly national accounts, UK: April to June 2021.

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4. The production sector

Production output increased by 0.8% in August 2021, with mixed growth across the four sectors (Figure 5). This follows a 0.3% growth in July 2021, revised down from 1.2% as a result of downward revisions to the estimates for extraction of crude petroleum and natural gas, and the manufacture of motor vehicles. These revisions are mainly because of new data for July 2021.

Mining and quarrying grew by 16.0% in August 2021, following revised growth of 17.7% in July 2021 (down from 21.9%), and contributing the most to production’s monthly increase. This strong growth in recent months mainly reflects the reopening of oil field production sites previously temporarily closed for planned maintenance. Despite output levels in the extraction of crude petroleum and natural gas expanding to levels last seen in December 2020, they remain low by historical standards, with August 2021 output 16.3% below its August 2019 level.

The manufacturing sector grew by 0.5% in August 2021, following a downwardly revised 0.6% fall in July 2021 (revised from flat growth), with output in 9 out of the 13 manufacturing sub-sectors increasing. Most of the contribution to manufacturing growth was because of a 6.6% increase in the manufacture of motor vehicles, as it continues to recover following supply side challenges predominantly caused by the global microchip shortage disrupting car production. However, output in the manufacture of motor vehicles remains 14.5% below its February 2021 peak, while sales and repairs of motor vehicles are close to their pre-coronavirus (COVID-19) pandemic levels.

Growth in manufacturing was partially offset by the manufacture of basic pharmaceutical products and pharmaceutical preparations, which fell by 5.1% and is now back to output levels more comparable with recent times, following volatile movements between April and June 2021.

Elsewhere, electricity, gas, steam and air conditioning supply fell by 2.8% in August 2021 as the manufacture of gas eased towards more normal levels. This followed exceptionally high levels of gas output in May 2021 (last higher in December 2001), mainly resulting from adverse weather conditions boosting demand for energy. Water supply also fell in August 2021, by 0.8%.

Overall, production grew by 0.3% in the three months to August 2021, mainly because of a 3.7% growth in mining and quarrying, a 1.1% increase in water supply and a 0.3% increase in electricity, gas, steam and air conditioning supply. These increases were partially offset by a fall of 0.1% in manufacturing, mainly because of a 7.8% fall in the manufacture of motor vehicles as car producers faced supply side challenges amidst a global microchip shortage.

More detailed breakdowns on production are available in the Index of Production, UK: August 2021, while more detail on the revisions prior to July 2021 can be found in GDP quarterly national accounts, UK: April to June 2021.

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5. The construction sector

Construction output fell by 0.2% in August 2021 and is the second consecutive monthly fall following the 1.0% fall in July 2021 (revised up from a 1.6% fall).

Construction output recently peaked to be 0.9% above its pre-coronavirus (COVID-19) pandemic level in April 2021 but in August 2021 is now 1.5% below that level (Figure 7). This reflects recent challenges faced by the construction industry from rising input prices and in delays to the availability of construction products (notably steel, concrete, timber and glass).

The fall in monthly construction output in August 2021 was driven by a fall in repair and maintenance (0.6%) while new work remained broadly flat. At the sector level, the main drivers were non-housing repair and maintenance (falling by 3.1%) and private commercial (falling by 1.7%). These falls were partially offset by growth in private housing repair and maintenance (3.2%) and private housing new work (1.0%).

A wider analysis of the construction industry shows that businesses in the industry have recently faced rising costs from their suppliers. Analysis using the Business Insights and Conditions Survey shows that, as of August 2021, approximately one in two construction businesses said prices of goods or services bought have increased more than normal, compared with approximately one in four in March 2021. While across all industries, approximately one in four businesses said prices of goods or services bought have increased more than normal in August 2021.

Overall, in the three months to August 2021, construction output fell by 1.3%. This is because of a 4.7% fall in repair and maintenance (because of falls in both private housing and non-housing repair and maintenance). These falls were partially offset by 0.8% growth in new work (because of a rise of 18.1% in infrastructure and a 14.4% rise in private industrial new work).

Volume estimates in the monthly gross domestic product (GDP) and construction outputs releases will differ for the period 1997 to 2019 because of the construction publication measuring the volume of construction work, while the GDP series measures gross value added (that is, output minus intermediate consumption). Construction estimates will align, however, from January 2020 onwards. Articles published on 28 June 2021 and 8 September 2021 provide information and indicative impacts of this change to industry level gross value added volume.

Further detail on the contributions to construction growth can be found in Construction output in Great Britain: August 2021.  

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6. Monthly GDP data

Monthly gross domestic product by gross value added
Dataset | Released 13 October 2021
The gross value added (GVA) tables showing the monthly and annual growths and indices as published within the monthly gross domestic product (GDP) statistical bulletin.

Contributions to monthly GDP
Dataset | Released 13 October 2021
Contributions to growth within monthly gross domestic product (GDP), UK.

Monthly gross domestic product: time series
Dataset | Dataset ID: MGDP | Released 13 October 2021
Monthly estimate of gross domestic product (GDP) containing constant price gross value added (GVA) data for the UK.

Monthly GDP and main sectors to four decimal places
Dataset | Released 13 October 2021
Monthly index values for monthly gross domestic product (GDP) and the main sectors in the UK to four decimal places.

Revisions triangles for monthly GDP
Dataset | Released 13 October 2021
Comparison of gross domestic product (GDP) first estimates against estimates published later.

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7. Glossary

Contribution to growth

Contribution to growth indicates how many percentage points a sector or industry is adding or removing from a given growth rate, usually headline GDP growth.

Gross domestic product (GDP)

A measure of the economic activity produced by a country or region. Gross domestic product (GDP) growth is the main indicator of economic performance. There are three approaches used to measure GDP:

  • the output approach
  • the expenditure approach
  • the income approach

Index numbers

Data relative to a given base value, which typically refers to a year.

Rolling three-month growth

Rolling three-month growth takes the average level of three consecutive months (for example, April, May and June), and compares it with the average level of the previous three months (for example, January, February and March). The rolling three-month growth rate is often used alongside the monthly growth rate, as the latter can be more volatile.

For further definitions, please see the Glossary of economic terms.

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8. Measuring the data

This release captures the direct effects of the coronavirus (COVID-19) pandemic and the government measures taken to reduce transmission of the virus. We have faced an increased number of challenges in producing estimates of UK gross domestic product (GDP) and because of these challenges, GDP estimates for August 2021 are subject to more uncertainty than usual.

Early in the pandemic, we faced some challenges in receiving timely responses to the Monthly Business Survey (MBS) as businesses adapted to new conditions. In recent months, response rates have improved and further information on measuring the data across our main data sources is available in the following releases:

As part of Blue Book 2021 improvements, a new framework has been introduced to improve how we produce volume estimates of GDP for balanced years as part of the supply use process. This framework includes the implementation of double-deflated industry-level gross value added for the first time. This improvement was first reflected in the 30 September 2021 quarterly national accounts and in this monthly GDP publication.

Note that estimates for the construction industry from this new approach (double deflation) will differ to those published in the Construction output release as they account for both the outputs produced and inputs consumed by the industry. There are also some coverage differences given the use of the Annual Business Survey in their compilation.

Information regarding changes for the financial sector data and double deflation were released on 28 June 2021. Additional analysis was published on 28 July, providing indicative impacts on quarterly average GDP. On 8 September 2021, we published Impact of Blue Book 2021 changes on quarterly and monthly volume estimates of gross domestic product by industry, and these changes have been taken on in this monthly GDP release, 13 October 2021. The UK National Accounts, The Blue Book: 2021 will be published on 29 October 2021.

Consultation on the Code of Practice for Statistics

On behalf of the UK Statistics Authority, the Office for Statistics Regulation (OSR) is conducting a consultation on the Code of Practice for Statistics, proposing changes to the 9:30am release practice. Please send comments by 21 December 2021 to: regulation@statistics.gov.uk.

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9. Strengths and limitations

This release gives data for August 2021 for the first time, alongside revisions to July 2021.

Quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Gross domestic product (GDP) QMI.

The monthly growth rate for GDP is volatile. It should therefore be used with caution and alongside other measures, such as the three-month growth rate, when looking for an indicator of the medium-term trend of the economy. However, it is useful in highlighting one-off changes that can be masked by three-month growth rates.

The latest comparisons of month on same month a year ago should be treated with caution given the impact of base effects on growth rates because of the economic impact of the coronavirus pandemic throughout 2020. Such comparisons and growth rates can nonetheless be found in our accompanying dataset.

Communicating gross domestic product

Recent analysis explains our latest position on how we are looking to communicate GDP, including how we will continue to acknowledge that “technical” recessions comprised at least two consecutive quarters of contracting GDP.

While it is still true that these early estimates are prone to revision, we prefer to focus on the magnitude of the contraction that has taken place following the coronavirus (COVID-19) pandemic. It is clear that the contraction in GDP in Quarter 2 (Apr to June) 2020 was the largest recession on record. Our latest estimates show that the UK economy is now 0.8% smaller than it was in February 2020, the effects of which have been most pronounced in those industries that are most exposed to public health restrictions and the effects of social distancing.

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Manylion cyswllt ar gyfer y Bwletin ystadegol

Ellis Best
gdp@ons.gov.uk
Ffôn: +44 1633 455284