PwC comment on ONS GDP July release

Barret Kupelian, senior economist at PwC, says:

“The UK economy grew by around 0.5% on a month-on-month basis in May, beating expectations. Importantly, all three main engines - services, production and construction - grew simultaneously. To date, UK GDP has grown in three out of the five months of this year that data is available for. 

“However, the devil lies in the details and month-on-month GDP data should be interpreted with a pinch of salt. Special factors including increased visits to GPs - some of which potentially stimulates wider activity in the medical sector - and upward revisions to historic manufacturing growth flattered overall GDP growth in May. We expect one-off figures to continue to impact future data releases, including the Jubilee celebrations in June. And there may well be revisions to May’s figures in the future. 

“Finally, focusing on the services sector of the economy, most sub-sectors are considerably bigger than what they were before the pandemic [see chart]. We continue to see strong growth in transport and travel because of the summer holidays. More importantly, we are also seeing a quiet transformation happening in the business sector, which continues to invest in digital technologies to make operations more efficient and resilient. The information and communications sector is now around 8% bigger than pre-pandemic levels."