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Coronavirus: UK economic recovery 'slows' in September but outpaces global benchmark

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Passengers at Luton Airport, UK. Tourism and transport sectors continue to be depressed due to COVID-19 pandemic. Photo: Paul Childs/Reuters

The pace of the UK’s economic recovery from coronavirus slowed during September but was, for the third consecutive month, ahead of the global benchmark.

The global benchmark was down from 52.4 in August, according to the latest Lloyds Bank UK Recovery Tracker and IHS Markit, reflecting weaker contributions from eight of the thirteen nations monitored by the tracker, including the US (54.3 vs 54.6 in August) and China (54.5 v 55.1 in August).

While most nations experienced an increase in output, the pace of growth slowed across the board.

A reading above 50 signals output is rising, while a reading below 50 indicates contraction.

While UK private sector output continued to grow in September, the pace of that growth also fell month-on-month, posting a reading of 56.5, down from 59.1 in August.

Despite its own slowing growth, the UK’s overall output was comparatively strong versus elsewhere in Europe, with France (48.5), Spain (44.3) and Ireland (46.9) all posting output contractions.

Jeavon Lolay, head of economics and market insight at Lloyds Bank Commercial Banking, said: “While the UK’s recovery momentum remains ahead of the global curve, its lead over its international counterparts has narrowed as the initial impetus gained from re-opening the economy fades.

“Future growth will hinge on the path of the pandemic, and in particular the degree to which a rising number of new infections can be contained,” he continued.

Watch: What is a V-shaped economic recovery?

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The degree to which UK sectors outperformed their overseas counterparts narrowed month-on-month and the total number of UK sectors outperforming the global index fell.

Eleven out of fourteen UK sectors monitored by the tracker saw output rise faster than the global benchmark during September, two fewer than in August as healthcare (51.3) and tourism and recreation (43.7) fell behind alongside transportation (43.7).

The UK tourism and recreation sector – which returned to growth in August for the first time since February but in September registered an outright output decline – grappled with new COVID-19 restrictions and the end of the Eat Out to Help Out scheme.

While UK healthcare output growth slowed between August and September, it was only marginally behind the global benchmark of 52.4.

Healthcare leaders and those in the manufacturing supply chain attributed the sector’s decelerating trend to a temporary slowdown in orders after a surge in demand for personal protective equipment (PPE) and critical healthcare products earlier in the pandemic.

Ongoing restrictions on international air travel contributed to the UK’s transportation sector (43.7) being furthest behind. In contrast, the metals and mining sector (67.3) was furthest ahead.

Between August and September, the average lead UK sectors held over their global equivalents nearly halved, dropping from 7.1 to 3.9 index points.

Of the fourteen UK sectors monitored by the tracker, transportation (43.7) and tourism and recreation (43.7) were the only two to record an outright decline in output during September.

Watch: What is a recession?

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