The UK economy grew by just 0.1% in July as the last Covid restrictions were lifted in England.
It was the economy’s sixth consecutive month of growth, but the increase was much lower than in the previous month, which saw 1% growth.
Arts, entertainment and recreation activities helped the rise, but the “pingdemic” kept many workers at home.
The UK economy is still 2.1% below its pre-pandemic peak, said the Office for National Statistics (ONS).
The ONS said there had been a boost from outdoor events such as sports clubs, amusement parks and festivals following the easing of restrictions on social distancing on 19 July in England.
However, the main contributor to growth was a 1.2% rise in production output, boosted by the reopening of an oil field production site, which was previously temporarily closed for planned maintenance.
Jonathan Athow, deputy statistician of the ONS, said: “Oil and gas provided the strongest boost, having partially bounced back after summer maintenance. Car production also continued to recover from recent component shortages.”
Many firms suffered from a lack of staff during July as workers were forced to self-isolate at home after being alerted by the NHS Test and Trace app, giving rise to what was dubbed the “pingdemic”.
Services output was largely unchanged in July, but the construction sector contracted for a fourth consecutive month, with output down by 1.6%.
Construction has been affected by a shortage of building materials as prices have soared and supply has failed to match demand.
Overall, GDP grew by 3.6% in the three months to July, the ONS said.
July’s figures, showing the bounce-back in the economy stalling, make clear the recovery cannot be taken for granted. The cause, primarily, was the upsurge in cases across the UK, tempering the impact of the full reopening of the economy. But the impact of the supply chain crisis is also in these figures.
While August should have been better, these figures are consistent with the now slow decline in furlough numbers. Monthly data is always volatile, but the pattern seems to be that the UK saw a very rapid initial bounce-back from the mere act of economic reopening.
Recovery is going to be trickier as pandemic support is phased out and the impact of labour shortages and trade problems start to be seen in the figures. Talk of a “boom” was rather premature.
Prof Jagjit Chadha, director of the National Institute of Economic and Social Research, told the BBC’s Today programme that the increase for July was “lower than most people expected”.
But he added: “The economy is slowly getting back to its pre-pandemic level. There were always going to be potholes along the way.”
Samuel Tombs of Pantheon Macroeconomics said the economic recovery had been “stopped in its tracks” by a surge in Covid cases in July.
He added that there were signs that the economy had regained momentum in August.
“Nonetheless, surveys continue to show that a large minority of households remain fearful of contracting Covid-19, even though they have been double-vaccinated.
“This suggests that the recovery in consumer-facing sectors might run out of steam again in the autumn if, as we expect, Covid-19 cases and hospital admissions remain on their current upward trend,” he said.
Kitty Ussher, chief economist at the Institute of Directors, said it appeared that “England’s thrilling run” in the Euro 2020 tournament had boosted growth in June, leading to “a bit of fall-back” in July.
Chancellor Rishi Sunak said the figures showed the recovery was “well under way”. But Labour’s Bridget Phillipson, shadow chief secretary to the Treasury, said “Conservative complacency” was “holding our country back”.
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WASHINGTON (AP) — Restaurant and hotel owners struggling to fill jobs. Supply-chain delays forcing up prices for small businesses. Unemployed Americans unable to find work even with job openings at a record high.
Those and other disruptions to the U.S. economy — consequences of the viral pandemic that erupted 18 months ago — appear likely to endure, a group of business owners and nonprofit executives told Federal Reserve Chair Jerome Powell on Friday.
The business challenges, described during a “Fed Listens” virtual roundtable, underscore the ways that the COVID-19 outbreak and its delta variant are continuing to transform the U.S. economy. Some participants in the event said their business plans were still evolving. Others complained of sluggish sales and fluctuating fortunes after the pandemic eased this summer and then intensified in the past two months.
“We are really living in unique times,” Powell said at the end of the discussion. “I’ve never seen these kinds of supply-chain issues, never seen an economy that combines drastic labor shortages with lots of unemployed people. … So, it’s a very fast changing economy. It’s going to be quite different from the one (before).”
The Fed chair asked Cheetie Kumar, a restaurant owner in Raleigh, North Carolina, why she has had such trouble finding workers. Powell’s question goes to the heart of the Fed’s mandate of maximizing employment, because many people who were working before the pandemic lost jobs and are no longer looking for one. When — or whether — these people resume their job hunts will help determine when the Fed can conclude that the economy has achieved maximum employment.
Kumar told Powell that many of her former employees have decided to permanently leave the restaurant industry.
“I think a lot of people wanted to make life changes, and we lost a lot of people to different industries,” she said. “I think half of our folks decided to go back to school.”
Kumar said her restaurant now pays a minimum of $18 an hour, and she added that higher wages are likely a long-term change for the restaurant industry.
“We cannot get by and pay people $13 an hour and expect them to stay with us for years and years,” Kumar said. “It’s just not going to happen.”
Loren Nalewanski, a vice president at Marriott Select Brands, said his company is losing housekeepers to other jobs that have recently raised pay. Even the recent cutoff of a $300-a-week federal unemployment supplement, he said, hasn’t led to an increase in job applicants.
“People have left the industry and unfortunately they’re finding other things to do,” Nalewanski said. “Other industries that didn’t pay as much perhaps … are (now) paying a lot more.”
Christopher Rugaber, The Associated Press
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