Yahoo Finance Hospitality businesses lead UK recovery as travel and tourism ease
Under embargo until 00:01 on Monday 18th October
The UK's hospitality sector outpaced the rest of the economy for the first time in more than nine years during September, new data revealed.
The Lloyds (LLOY.L) Bank UK Recovery Tracker showed that tourism and recreation – which includes pubs, hotels, restaurants and travel agents – had a reading of 62.2 last month.
A reading above 50 signals output is rising, while a reading below 50 indicates contraction.
The sector was the fastest growing of the 14 monitored by the tracker, for the first time since January 2012, as it benefitted from strong demand and an ease of lockdown restrictions.
And it became the only services sector to record the strongest monthly output growth since before the pandemic
Demand for large-scale events, such as concerts and music festivals, and the easing and simplification of international travel rules in England gave tourism a significant boost.
Transport operators also benefited as more people, heading back to work, began to commute.
The sector’s output rebounded sharply month-on-month, from 42.9 in August to 55.9 in September.
10 of the 14 sectors monitored by the tracker saw output rise during September, up from nine in August.
Read more: UK financial services boom as profits rise
The manufacturing sector did not fare so well. The output of automotive (44.5) manufacturers and metals and mining (49.2) and household goods (46.6) producers contracted sharply during September due to materials and staff shortages.
Meanwhile, the rate of input cost inflation last month was the second highest in the tracker’s history, as energy prices spiked and demand for labour intensified.
This led all 14 sectors to raise their prices, with transport operators and manufacturers of chemicals, food and drink, industrial goods and metals and mining products recording the sharpest month-on-month increases.
Jeavon Lolay, head of economics and market insight, Lloyds Bank Commercial Banking, said: “We are now firmly in an economic phase of recovery where big leaps in activity won’t happen every month.
“As the UK economy continues to inch towards its pre-pandemic peak, logistical challenges, higher energy prices and uncertainty relating to the path of the virus as we head into winter are key risks," he said.
He believes going forward "policymakers will need to tread carefully in order to safeguard the recovery, with important fiscal and monetary policy decisions due in the coming weeks and months.”
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