Accommodation service activities grew nearly 70 per cent as caravan parks and holiday lets picked up, with similar rates of expansion registered in personal service activities, such as hairdressing. Output in food and beverage service activities grew by 39 per cent as pubs, restaurants and cafés could serve customers in outdoor seating areas. The services sector grew 3.4 per cent compared with the previous month, with the reopening of consumer-facing services performing the “heavy lifting” for the economy, according to Jay Mawji, managing director at the online trading provider, IX Prime. Education was also a major source of growth as more pupils returned to in-person lessons in April.
He added that the growth rate would have been even stronger without declines in the often-erratic pharmaceutical industry, shutdowns at many car plants caused by the global semiconductor shortage and large-scale oilfield maintenance. Jonathan Athow, ONS deputy national statistician for economic statistics, said: “Strong growth in retail spending, increased car and caravan purchases, schools being open for the full month and the beginning of the reopening of hospitality all boosted the economy in April.”
Chancellor Rishi Sunak said the figures were “a promising sign that our economy is beginning to recover”. With performance slightly better than economists’ already optimistic forecasts, GDP was 3.7 per cent below the pre-pandemic level in February 2020, the smallest gap since the start of the crisis.
The shadow of coronavirus and a delay to the final reopening of the economy still hangs over the outlook, but economists downplayed concerns. James Smith, economist at investment bank ING, said the end of most restrictions on June 21 was likely to be postponed, but probably only by a few weeks until more people had been fully vaccinated, which would mean “that from an economic perspective, the impact probably won’t be huge”. He noted that pre-pandemic levels of output could now be surpassed by the end of the second quarter, adding “to the sense at the Bank of England that some monetary stimulus may soon have to be removed”.
Ed Monk, associate director, at the investment management company Fidelity International, said “it was spending in the newly reopened non-essential retail and hospitality sector that added the most momentum in the month, suggesting that households had been clamouring to get out and spend again.” Output is expected to expand further in May following the reopening of indoor hospitality and other businesses.
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