GDP monthly estimate, UK: July 2021

• Gross domestic product (GDP) is estimated to have grown by 0.1% in July 2021, and remains 2.1% below its pre-coronavirus (COVID-19) pandemic level (February 2020).
• Production output increased by 1.2% in July 2021 and was the main contributor to GDP growth; boosted by the reopening of an oil field production site, which was previously temporarily closed for planned maintenance.
• Construction contracted for a fourth consecutive month, with output down by 1.6% in July 2021, and is now 1.8% below its pre-pandemic level (February 2020).
• Services output remained broadly flat in July 2021, and remains 2.1% below its pre-pandemic level (February 2020).
• Arts, entertainment and recreation activities grew by 9.0%, boosted by sports clubs, amusement parks and festivals, and reflecting the easing of restrictions on social distancing from 19 July 2021.
• Output in consumer-facing services fell by 0.3% in July 2021, its first fall since January 2021 mainly because of a 2.5% fall in retail sales.

Monthly real gross domestic product (GDP) growth slowed in July 2021, growing by 0.1% compared with 1.0% growth in June 2021. This is the sixth consecutive month of GDP growth, as coronavirus (COVID-19) restrictions continued to ease to varying degrees in England, Scotland and Wales.

Table 1 shows an increase in production output in July 2021, a continued fall in construction, and flat growth in services. Overall, GDP remains 2.1% below its pre-coronavirus pandemic level (February 2020) in July 2021.

Overall, GDP grew by 3.6% in the three months to July 2021, largely because of the performance of the services sector. This partly reflects the gradual reopening of accommodation and food service activities, the reopening of non-essential stores, and the increase in school attendance compared with the previous three months (February to April 2021).

The latest comparisons of month on same month a year ago growth 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.

Services output remained broadly flat in July 2021, and remains 2.1% below its pre-coronavirus (COVID-19) pandemic level of February 2020. This follows strong growth of 1.5% in June 2021.

Figure 3 shows offsetting contributions across services sub-sectors in July 2021. Information and communication was the main contributor to services, mainly because of a 2.8% growth in computer programming, consultancy and related activities. Financial services also contributed positively to services, mainly because of a 2.1% growth in financial service activities (not including insurance and pensions). Estimates on financial services for July 2021 are mainly forecast at this stage, and may be revised in future releases.

Arts, entertainment and recreation activities saw strong growth in July 2021 of 9.0%. This reflects a boost from outdoor events such as sports clubs, amusement parks and festivals following the easing of restrictions on social distancing on 19 July 2021 in England. This is the strongest monthly growth in arts, entertainment and recreation activities since July 2020, when it grew by 16.3%, though it remains 18.8% below its pre-coronavirus pandemic level of February 2020.

Professional, scientific and technical activities fell by 2.3% in July 2021 and was the largest negative contributor to growth in services, as Figure 3 shows. Five of its eight sub-industries contracted in July 2021, with output in advertising and market research falling by 7.3% after an exceptionally strong June 2021, and a fall of 7.3% in legal activities. The drop in legal activities and real estate activities on a fee or contract basis (which fell by 10.4%) reflects the partial end to the Stamp Duty holiday period in England and Northern Ireland from 1 July 2021.

Output in consumer-facing services fell by 0.3% in July 2021, its first fall since January 2021 when it fell by 8.3%. Most of this fall is because of a 2.5% fall in retail trade (mainly because of a fall in food and fuel sales), partially offset by a 72.5% growth in travel agency, tour operator and other related reservation services (growing from historically low levels), and a 15.1% growth in sports activities, amusement and recreation activities. Overall, consumer-facing services are 6.7% below their pre-pandemic levels (February 2021), compared with all other services, which are just 0.9% below.

Human health activities fell by 1.1% in July 2021, mainly because visits to GPs fell following a high number of visits in June 2021. NHS Test and Trace services continue to contribute positively to output levels, but a fall in vaccination numbers in July 2021 removed 0.1 percentage points from 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 real GDP from the NHS Test and Trace services and vaccine programmes. These adjustments are applied to both the government expenditure data and output data, and are applied only to volume data because of the way the Office for National Statistics (ONS) estimates the output of health services.

Table 2 sets out the volume expenditure adjustments for January 2021 to July 2021 split between NHS Test and Trace services and vaccine programmes. The Test and Trace adjustment for July 2021 is £1,700 million, up from £1,550 million in June as the amount of coronavirus testing increased by approximately 10%. The vaccine programme’s adjustment for July 2021 is £400 million, down from £700 million in June as the number of coronavirus vaccinations fell by approximately 43%.

Overall, services grew by 4.5% in the three months to July 2021, and this partly reflects the gradual reopening of accommodation and food service activities, the reopening of non-essential stores, and the increase in school attendance compared with the previous three months (February to April 2021).

More detailed breakdowns on services are available in the Index of Services, UK: July 2021.

Production output increased by 1.2% in July 2021, with mixed growth across the four sectors (Figure 5). This follows a fall in production of 0.7% in June 2021.

Mining and quarrying contributed most to production’s increase, as it grew by 21.9% in July 2021. This strong growth mainly reflects the reopening of an oil field production site, which was previously temporarily closed for planned maintenance. Despite this growth, output in the extraction of crude petroleum and natural gas remains low by historical standards, with July 2021 output 19.1% below its July 2020 level.

The manufacturing sector remained broadly flat in July 2021, after five consecutive months of growth, with anecdotal evidence from businesses responding to the Monthly Business Survey suggesting staff shortages (including COVID-19 self-isolation requirements) as a challenge to production. Results from Wave 36 of the Business Insights and Conditions Survey (BICS) also suggest that the most common challenge, reported by manufacturing firms, to filling vacancies in July were a lack of suitable applicants for the roles on offer, followed by a reduced number of EU applicants.

The largest negative contributors to manufacturing in July 2021 were the manufacture of machinery and equipment, falling by 4.3%, and the manufacture of fabricated metal products, falling by 3.3%.

Production in 4 out of the 13 manufacturing sub-sectors increased in July 2021. The largest positive contribution to manufacturing growth came from the manufacture of motor vehicles, trailers and semi-trailers, which grew by 11.4% as reports of microchip shortages disrupting car production eased in July 2021.

Overall, production grew by 0.4% in the three months to July 2021, mainly because of a boost to the manufacture of food and beverage products throughout this period as demand from hospitality services increased following their gradual reopening. The boost to manufacturing was partially offset by a fall in the extraction of crude petroleum, as planned shutdowns of oil fields for maintenance temporarily held back output.

More detailed breakdowns on production are available in the Index of Production, UK: July 2021.

Construction output fell for a fourth consecutive month in July 2021, by 1.6%. As Figure 6 shows, construction output recently peaked at 1.8% above its pre-coronavirus (COVID-19) pandemic level (February 2020) in March 2021 but, in July 2021, is now 1.8% below that February 2020 level.

The fall in monthly construction output in July 2021 was driven by falls in both new work (1.1%) and repair and maintenance (2.4%). At the sector level, private housing saw falls in both private housing new work and private housing repair and maintenance of 7.5% and 6.2% respectively. Anecdotal evidence from businesses responding to the Monthly Business Survey for Construction and Allied Trades suggested that price increases, caused by delays in the availability and sourcing of construction products (notably steel, concrete, timber and glass) were the main reason for the decline.

Further detail on the contributions to construction growth and the three months to July trends can be found in Construction output in Great Britain: July 2021.

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.

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 July 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:

• Construction output in Great Britain: July 2021
• Index of Services, UK: July 2021
• Index of Production, UK: July 2021

In Blue Book 2021, a new framework will be 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 will be reflected in the September quarterly national accounts and October monthly GDP estimates.

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 will be taken on in our next monthly GDP release, on 13 October 2021.

In addition, the next monthly GDP release on 13 October 2021 will also see revisions to the periods January 2020 to June 2021 in line with the National Accounts Revision Policy. These revisions will be consistent with the Quarterly National Accounts release published on 30 September, and will incorporate the Blue Book 2021 methodological changes, improved source data and additional updated data as would happen in all quarterly national accounts releases, this includes new Value Added Tax (VAT) turnover data for Quarter 4 (Oct to Dec) 2020 and Quarter 1 (Jan to Mar) 2021. In the next monthly release, July 2021 will also be open for revision.

This release gives data for July 2021 for the first time and there are no revisions in this release.

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.

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 are comprised of 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 2.1% 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.