GP Visits Keep GDP Growing in October

Main Points

• GDP grew only slightly in October, and growth was largely driven by the continuing return to face-to-face NHS appointments. Supply chain problems are likely to have been a factor in the lack of growth for manufacturing and the fall in construction activity.
• We forecast growth of 0.6 per cent in November, before significant concerns about transmission of Covid-19 began to return, falling to 0.3 per cent in December
• Our overall forecast for the fourth quarter of 2021 is for growth of 1.0 per cent, following 1.3 per cent in the third quarter. Omicron is expected to restrain growth in the coming months but not to cause economic disruption anywhere near the scale of 2020, with households and businesses having adapted economic behaviour more with each wave.

“October saw growth supported by the continued normalisation of some consumer-facing services sectors. By far the largest contribution came again from the health sector, with a further return to face-to-face GP appointments and strong test-and-trace activity. Retail and travel agencies also grew relatively rapidly, but hospitality fell back sharply after a strong September. Supply chain issues may have been a factor in slower than expected October growth rate: something which will be compounded by the emergence of the omicron variant, which will cause a rise in social distancing, both mandated and voluntary, in December and early 2022. Its overall economic impact is likely to be smaller than the first and second full lockdowns, but will delay the return of GDP to its pre-Covid level.”

Rory Macqueen
Principal Economist - Macroeconomic Modelling and Forecasting