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Slow tourism recovery dragging on UK economy

Slow tourism recovery dragging on UK economy

The pace of the economic recovery in the UK from coronavirus fell behind the global benchmark in October for the first time since June.

The trend developed as consumer facing industries and their suppliers grappled with new restrictions and slowing demand, according to the latest Lloyds Bank UK Recovery Tracker.

The UK posted a reading of 52.1 (down from 56.5 in September), mirroring the economic slowdown seen across the rest of Europe amid a resurgence of Covid-19.

The Tracker, complied through IHS Markit, provides unique insight into the shape and pace of the recovery following the disruption caused by Covid-19.

Six of the fourteen UK sectors monitored by the tracker saw output rise faster than the global index during October.


However, this is five fewer than in September.

Beverages and food (43.5), household goods (45), technology equipment (52.7), chemicals (51.9), real estate (52.4) and banks (55.2) all dropped below the benchmark in October, while tourism and recreation (25.5) and transportation (43.6) both fell further behind.

A reading above 50 signals output is rising, while a reading below 50 indicates output is contracting.

Tourism and recreation fell particularly sharply behind the global benchmark in October following the rollout of various tiered lockdown measures as new hospitality curfews and restrictions on social interaction were introduced.

Beverages and food also fell sharply as a result, with producers in the sector experiencing a drop in orders from pubs and restaurants.

Metals and mining (70.3) was the most notable upside outlier, maintaining its position as the UK sector furthest ahead of the global benchmark for the second month in a row.

The Global PMI posted a reading of 53.3 in October, up from a revised 52.5 in September and above the UK’s reading of 52.1.

A robust recovery in business activity across the United States (56.3) was the main contributor to the rising global benchmark, alongside strong performances by China (55.7), India (58.0) and Brazil (55.9).

Despite a slowdown in growth, the UK’s overall index was comparatively strong versus European nations that tightened Covid-19 restrictions earlier, with France (47.5), Spain (44.1) and Italy (49.2) all posting output contractions.

Germany was the only nation to buck the downwards European trend, with a steep rebound in manufacturing production underpinning the fastest expansion of private sector output since July (55.0).

Jeavon Lolay, head of economics and market insight, Lloyds Bank Commercial Banking, said: “The October data shows that the UK’s recovery was slowing after a strong economic rebound in the third quarter.

“At the sector-level, eleven of the sectors monitored by the tracker reported a weaker performance in October than during September.”