The economic recovery slowed sharply in October after the construction industry shrank amid rising steel, concrete and timber costs.
The economy grew by 0.1 per cent in October, compared to its 0.6 per cent expansion in September, according to official figures. Output remains 0.5 per cent below its pre-pandemic levels.
Sterling dipped to trade at $1.321 after the Office for National Statistics (ONS) figures were published as investors took them as another sign that the Bank of England was unlikely to raise interest rates after the meeting of the monetary policy committee next week.
Activity in the services sector rose by 0.4 per cent in October after an increase in face-to-face appointments in GP surgeries boosted the healthcare sector. The sector has now returned to its pre-Covid peak, the ONS has reported. The consumer-facing segment, including shops, restaurants and bars, remained 5.2 per cent below pre-pandemic levels but all other services, including the public sector, are 1.4 per cent above.
Capital Economics said the GDP figures were disappointing and suggested that the “economy had slowed to a crawl” even before the Omicron variant emerged late last month. “The government’s Plan B Covid-19 restrictions could be the difference between the economy growing or contracting in December,” the consultancy said.
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Output in the construction industry fell 1.8 per cent in October: its sharpest fall since April last year at the start of the first coronavirus lockdown. The ONS said that the industry had struggled with supply chain bottlenecks and rising input costs.
The construction sector peaked in April at 0.9 per cent above its pre-Covid level but is now 2.8 per cent smaller than before the pandemic.
The production sector, including gas and electricity supply, manufacturing and mining, shrank by 0.6 per cent in October. Manufacturing remained flat month on month but activity in the mining and quarrying sector fell 5 per cent because of the timing of planned maintenance of oil fields this summer.