GDP monthly estimate, UK: March 2021

• UK gross domestic product (GDP) is estimated to have grown by 2.1% in March 2021, the fastest monthly growth since August 2020, as schools in some parts of the UK reopened throughout the month.
• The service sector grew by 1.9% in March 2021, with schools re-opening across England and Wales and retail trade sales continuing to show strength.
• Output in the production sector grew by 1.8% in March 2021, as manufacturing grew for a second consecutive month, at 2.1%.
• The construction sector grew by 5.8% in March 2021, driven by growth in both new work and repair and maintenance. The growth in construction (and indeed manufacturing) reflect businesses continuing to adapt, including development of COVID-19 secure environments to operate in.
• March’s GDP is 5.9% below the levels seen in February 2020, and 1.1% below the initial recovery peak in October 2020.
• Latest estimates also show only small revisions to GDP in January (now negative 2.5%, from negative 2.2%) and February (now growth of 0.7%, from 0.4%).

Output growth in the services sector strengthened in March 2021, growing 1.9% as some coronavirus (COVID-19) restrictions began to ease with the reopening of schools, in particular, having an impact; this follows 0.6% growth in February 2021. The services sector is now 7.2% below pre-pandemic level (February 2020) and 2.2% below its initial recovery peak (October 2020).

The production sector grew for a second consecutive month in March 2021, by 1.8%, following growth of 1.0% in February 2020. The production sector is now 1.8% below its February 2020 level. The construction sector saw growth of 5.8% in March 2021, driven by both new work and repair and maintenance. The construction sector is now 2.4% above its February 2020 level.

Revisions to headline GDP in January and February 2021 were mainly because of revisions to human health and social work activities (see Section 3); with January’s headline GDP growth downwardly revised to negative 2.5% from negative 2.2%, and February’s headline GDP growth upwardly revised to 0.7% from 0.4%.

Overall, GDP contracted by 1.5% in the three months to March 2021, compared with a downwardly revised 1.7% contraction in the three months to February 2021. More details on Quarterly growth can be found in the First Quarterly Estimate publication.

Services output grew by 1.9% in March 2021 but remains 7.2% below its pre-pandemic level of February 2020.

Figure 3 shows education output as the main contributor to services growth in March 2021, as schools began to re-open in England (from 8 March) and Wales (from 15 March). However, despite this growth, education output in March 2021 remained 3.9% below its December 2020 level, when schools were last fully open before the latest COVID-19 restrictions were introduced across the UK. Wholesale and retail trade was the second largest contributor to services output as retail sales continued to show strength, growing 2.9%.

Output in human health and social work activities grew 1.7% in March 2021, following revised growth of 0.7% in February and negative 0.7% in January. This gradual pick up in health in the first three months of 2021 is driven by coronavirus testing and tracing and vaccine schemes across the UK. Adjustments have been made to reflect the testing and tracing and vaccine programmes. More information is available in Section 8: Measuring the data.

Overall, service sector growth for January 2021 was downwardly revised to negative 2.9% (from negative 2.5%), while growth for February 2021 was upwardly revised to 0.6% (from 0.2%). Revisions were mainly because of the health sector; with growth in health output for January revised down to negative 0.7% (from positive 5.9%), and growth for February revised up to 0.7% (from negative 2.7%). A contraction in output of the health industry (excluding test and tracing and vaccine schemes) has contributed to the weakness in January 2021 as planned health activities were delayed because of precautions undertaken as a result of the surge in COVID-19 cases and hospitalisations.

Services output contracted by 2.0% in the three months to March 2021. This was driven by decreases in in education services and wholesale and retail trade, partly offset by growth in human health and social work activities.

Production grew by 1.8% in March 2021 with growth in three out of the four sub-sectors. This is the fastest growth in production since July 2020, when it grew 5.6%.

The manufacturing sub-sector was the largest contributor to growth, growing 2.1%, its fastest pace since July 2020 when it grew 7.4%. Eleven out of the thirteen manufacturing sub-sectors grew with the largest positive contribution coming from the manufacturing of machinery and equipment (which grew by 8.3%) and manufacturing of computer, electronic and optical products (which grew by 5.5%).

Mining and quarrying output grew by 2.5% in March 2021 following two months of contraction; mainly because of the extraction of oil and gas picking up.

Output in the production sector fell by 0.4% in the three months to March 2021, driven by the large fall in manufacturing in January 2021 amidst tightened coronavirus (COVID-19) restrictions.

Construction output grew by 5.8% in March 2021, with rising demand and good weather cited as contributing factors. This is the fastest growth in construction since July 2020, when it grew 17.8%.

Construction growth in March 2021 was driven by both a rise in repair and maintenance (4.4%) and in new work (6.7%). Further detail on the contributions to construction growth can be found in Construction output in Great Britain: March 2021.

Growth to construction for January and February 2021 have been upwardly revised to 0.4% (up by 0.4 percentage points) and 2.3% (up by 0.7 percentage points) respectively, mainly because of late survey returns.

The construction sector expanded by 2.6% in the three months to March 2021. The main contributors in new work were infrastructure and private new housing which grew by 4.3% and 2.7% respectively, while the main driver in repair and maintenance was non-housing repair and maintenance which grew 3.2%.

Contribution to growth

Contribution to growth indicates how many percentage points a sector or industry is adding or removing from a given growth rate, usually headline GDP growth.

Gross domestic product (GDP)

A measure of the economic activity produced by a country or region. Gross domestic product (GDP) growth is the main indicator of economic performance. There are three approaches used to measure GDP:

• the output approach
• the expenditure approach
• the income approach

Index numbers

Data relative to a given base value, which typically refers to a year.

Rolling three-month growth

Rolling three-month growth takes the average level of three consecutive months (for example, April, May, and June), and compares it with the average level of the previous three months (for example, January, February, and March). The rolling three-month growth rate is often used alongside the monthly growth rate, as the latter can be more volatile.

For further definitions, please see the Glossary of economic terms.

This release captures the direct effects of the coronavirus (COVID-19) pandemic and the government measures taken to reduce transmission of the virus. We have faced an increased number of challenges in producing estimates of UK gross domestic product (GDP) and because of these challenges, GDP estimates for March 2021 are subject to more uncertainty than usual.

Early in the pandemic we faced some challenges in receiving timely responses to the monthly business survey as businesses adapted to new conditions. In recent months, response rates have improved and further information on measuring the data across our main data sources is available in the following releases:

• Construction output in Great Britain: March 2021
• Index of Services, UK: March 2021
• Index of Production, UK: March 2021

Adjustments for testing and tracing and vaccine programmes in the UK

Monthly adjustments have been applied to the data to account for the impact from testing and tracing and vaccine programmes, calculated using updated quarterly government data while preserving the monthly growth in the programmes, and its impact on the economy. The volume adjustment for January 2021 across all industries is £1,900 million (with a split of £1,400 million for testing and tracing and £500m for vaccines) , £1,900 million for February 2021 (split £1,300m and £600m respectively) and £3,700 million for March 2021 (split £2,900m and £800m respectively). Not all of this extra activity will be seen in the output of the health industry as there are other industries involved in the production of the vaccines and various testing kits, as well as a number of service industries involved in the logistical process of delivering the programmes.

These approximate estimates are informed by the latest available data including in-year spending data for testing and tracing; the available estimated cost to secure and manufacture vaccines for the UK and deploy vaccines in England; available testing and vaccination data and estimated imports. These are early estimates that will be refined as a new method is introduced later this year.

This release gives data for March 2021 for the first time, with January and February 2021 open for revisions.

Quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Gross domestic product (GDP) QMI.

The monthly growth rate for GDP is volatile. It should therefore be used with caution and alongside other measures, such as the three-month growth rate, when looking for an indicator of the medium-term trend of the economy. However, it is useful in highlighting one-off changes that can be masked by three-month growth rates.

Communicating gross domestic product

Recent analysis explains our latest position on how we are looking to communicate GDP, including how we will continue to acknowledge that “technical” recessions are comprised of at least two consecutive quarters of contracting GDP.

While it is still true that these early estimates are prone to revision, we prefer to focus on the magnitude of the contraction that has taken place following the COVID-19 pandemic. It is clear that the contraction in GDP in Quarter 2 (Apr to June) 2020 was in the largest recession on record. Our latest estimates show that the UK economy is now 5.9% smaller than it was in February 2020, the effects of which have been most pronounced in those industries that are most exposed to public health restrictions and the effects of social distancing.