GDP monthly estimate, UK: May 2021

• UK gross domestic product (GDP) is estimated to have grown by 0.8% in May 2021, the fourth consecutive month of growth, but remains 3.1% below the pre-coronavirus (COVID-19) pandemic levels seen in February 2020.
• The service sector grew by 0.9% in May 2021 – accommodation and food service activities grew by 37.1% as restaurants and pubs welcomed customers back indoors following the easing of coronavirus restrictions.
• Output in the production sector returned to growth in May 2021, at 0.8%, mainly because of adverse weather conditions in May boosting output in electricity, gas and air supply.
• Output in the manufacture of transport equipment fell by 16.5%, its largest fall since April 2020 as microchip shortages disrupted car production.
• The construction sector contracted for a second consecutive month in May 2021, by 0.8%, but remains 0.3% above its pre-pandemic level in February 2020.

Monthly real gross domestic product (GDP) is estimated to have increased by 0.8% in May 2021 as coronavirus (COVID-19) restrictions continued to ease to varying degrees in England, Scotland and Wales. This is the fourth consecutive month of growth, albeit slower compared with March (2.4%) and April (2.0%).

Table 1 shows growth in services and production in May 2021, while construction contracted for a second consecutive month following exceptionally strong growth in February and March.

Overall, GDP grew by 3.6% in the three months to May 2021, mainly because of strong retail sales over the three months, increased levels of attendance as schools reopened from March, and the reopening of food and beverage service activities.

The latest month on same month a year ago comparisons should be treated with caution given the impact of base effects on growth rates because of the economic impact of the coronavirus pandemic throughout 2020. Such comparisons and growth rates can nonetheless be found in our accompanying dataset.

Revisions

January 2021 to April 2021 were open for revisions, in line with our National Accounts Revisions policy. Revisions to headline GDP were relatively small given large monthly growth rates. As Table 2 shows, GDP in January 2021 is now estimated to have fallen by 2.7% (0.2 percentage points more than previously estimated), while March is now estimated to have grown by 2.4% (0.3 percentage points more than previously estimated).

Overall, UK GDP is estimated to have decreased by 1.6% in Quarter 1 (Jan to Mar) 2021, revised from the first estimate of a 1.5% decline. This mainly reflects downward revisions in education services because of updated attendance data, and estimates reflecting the effect of remote learners. More detail can be found in the GDP quarterly national accounts, UK: January to March 2021.

April 2021 was also open for revisions, with April’s GDP growth being revised down from 2.3% to 2.0%. This downward revision to April’s GDP growth is mainly because of updated NHS Test and Trace data, which we use to adjust health sector output to better reflect activity since the programme started.

Services output grew by 0.9% in May 2021 but remained 3.4% below its pre-coronavirus (COVID-19) pandemic level of February 2020.

Consumer-facing services grew by 3.2% as coronavirus restrictions continued to ease throughout May, with output levels now at the closest to their pre-pandemic level, at just 7.8% below, as Figure 3 shows. Despite growth in consumer-facing services, it is travel, transport and other personal services that continue to contribute to output remaining below pre-pandemic levels.

Food and beverage services activities was the main contributor to the growth in consumer-facing services, growing by 34.0% in May 2021 as restaurants and pubs could serve the public indoors for part of the month. Strong growth means that the industry is now 9.4% below its pre-pandemic level (February 2020), but 0.3% above its August 2020 peak when the Eat Out to Help Out Scheme boosted consumer demand for bars and restaurants. Arts, entertainment and recreation also contributed positively to consumer-facing services growth, growing by 7.3%.

Figure 4: The easing of hospitality restrictions in May 2021 has shifted demand from food stores to restaurants and pubs

Monthly index, February 2020 to May 2021, UK, February 2020 = 100

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Figure 4 illustrates that the easing of hospitality restrictions had a negative impact on sales by food stores (which make up 39% of total retail sales), but provided a boost to food and beverage service activities (which make up 2.1% of UK GDP) as people returned to restaurants, bars and cafés instead. Sale volumes from predominantly food stores fell by 5.7% in May 2021, compared with total retail sales falling by 1.4%. More detail can be found in Retail sales, Great Britain: May 2021.

Figure 5 shows education output contributed negatively to gross domestic product (GDP) in May 2021, as it fell by 0.5% compared with the previous month. Weighted attendance (taking into account the impact of remote learners) for May 2021 was approximately 91.6%, compared with 93.0% in April 2021.

Human health activities returned to growth, growing by 0.3% in May 2021. Output levels also remain high, driven by NHS Test and Trace services, and vaccine schemes across the UK.

Taking into account NHS Test and Trace services and vaccine programmes

Coverage adjustments have been applied to the volume data to estimate the impact on real GDP from the NHS Test and Trace services and vaccine programmes. These adjustments are applied to both the government expenditure data as well as output data, and are applied only to volume data because of the way the Office for National Statistics (ONS) estimates the output of health services.

To calculate the adjustment, in line with the UK National Accounts revisions policy, we have used the latest available quarterly government data – the estimated cost to secure and manufacture vaccines for the UK and deploy vaccines in England, and testing and vaccination data, and estimated imports – and applied indicative volume adjustments to preserve the growth within the health sector and its impact on the economy, rather than applying an adjustment to preserve the level that could give an incoherent growth.

Table 3 sets out the volume expenditure adjustments for January 2021 to May 2021 split between NHS Test and Trace services and the vaccine programmes. The reduction in NHS Test and Trace adjustment for May compared with April can be seen in the latest coronavirus daily testing data, which shows a reduction of approximately 10% of total tests between April and May 2021.

Not all of this extra volume expenditure 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. We will be undertaking further work to understand the supply chains involved in delivering the NHS Test and Trace service, as well as the production and distribution of COVID-19 vaccinations, which may lead to some revisions to the industry distribution of these activities.

Compared with our previous monthly GDP release, health adjustments have been revised down slightly because we took on new government data, meaning that health output contributed less to headline GDP growth and is the main reason for the downward monthly GDP revision seen in April 2021 (see Table 2 in Section 2). More detail can be found in the GDP quarterly national accounts, UK: January to March 2021.

Overall, services output grew by 3.9% in the three months to May 2021. This was led by strong retail sales, the return to schools boosting education output, and people returning to restaurants and pubs.

Production grew by 0.8% in May 2021, with mixed growth across the four sectors, as Figure 6 shows. This follows a revised fall in April 2021, from a 1.3% fall to 1.0%.

Electricity, gas, steam and air conditioning supply grew by 5.7% in May 2021, and contributed most to May’s increase in production output, contributing 0.6 percentage points to total production growth. This is the largest growth in electricity, gas, steam and air conditioning supply since April 2012, mainly resulting from adverse weather conditions in May 2021 boosting demand for energy.

The manufacturing sector remained broadly flat, contracting slightly for a second consecutive month, by 0.1%. Production in 6 out of the 13 manufacturing sub-sectors fell in May 2021. The largest contribution to the fall came from the manufacture of transport equipment, falling by 16.5%, as microchip shortages disrupted car production.

The fall in the manufacture of transport equipment was partially offset by growth of 25.2% in the manufacture of basic pharmaceutical products and pharmaceutical preparations, which grew following a large fall of 14.5% in April 2021. Overall, output in this volatile industry is back to above levels seen earlier in the year. More detailed breakdowns are available in the Index of Production, UK: May 2021.

Overall, output in the production sector increased by 0.8% in the three months to May 2021, driven mainly by manufacturing (in particular, of food products, beverages and tobacco, and machinery and equipment), partly offset by the large fall in mining and quarrying in April 2021.

The use of new data has caused some minor revisions throughout the monthly profile of production output, between January to April 2021, mainly because of revisions to manufacturing.

Construction output fell for a second consecutive month in May 2021, by 0.8%, following exceptionally strong growth in February and March, and an upwardly revised 0.7% decline in April 2021. Despite the fall, construction remains the only sector to have output levels at above its pre-coronavirus (COVID-19) pandemic level (February 2020).

The fall in construction output in May 2021 was driven by both a fall in repair and maintenance (1.6%) and a fall in new work (0.3%). Further detail on the contributions to construction growth can be found in Construction output in Great Britain: May 2021.

The construction sector expanded by 6.3% in the three months to May 2021 because of increases in new work, and repair and maintenance of 6.6% and 5.8% respectively.

The increase in new work (6.6%) in the three months to May 2021 was because of growth in all new work sectors. The largest contributions to growth were private new housing, and infrastructure, which grew by 7.4% and 9.7% respectively.

The increase in repair and maintenance (5.8%) in the three months to May 2021 was because of growth in non-housing, and private housing repair and maintenance, which grew by 9.0% and 4.7% respectively, and offset the 3.1% fall in public housing repair and maintenance.

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 May 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 (MBS) 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: May 2021
• Index of Services, UK: May 2021
• Index of Production, UK: May 2021

In Blue Book 2021, a new framework will be introduced to improve how we produce volume estimates of GDP for balanced years as part of the supply use process. This framework includes the implementation of double-deflated industry-level gross value added for the first time. This improvement will be reflected in the September quarterly national accounts and October monthly GDP estimates. On 28 June 2021, we published Blue Book 2021 annual indicative impacts of this change, and will publish further indicative impacts on 28 July including a preliminary view of the new quarterly profile of current price and volume estimates of GDP.

This release gives data for May 2021 for the first time and incorporates revisions to monthly data from January 2021 to March 2021 as published in the quarterly national accounts. April 2021 is also open for revision.

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 coronavirus (COVID-19) pandemic. It is clear that the contraction in GDP in Quarter 2 (Apr to June) 2020 was the largest recession on record. Our latest estimates show that the UK economy is now 3.1% 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.