UK GDP fell less than expected in January

According to the report from Office for National Statistics, UK gross domestic product (GDP) is estimated to have fallen by 2.9% in January 2021, as government restrictions reduced economic activity. Economists had expected a 4.9% decrease.

The output approach to GDP shows that January’s level was 9.0% below that seen in February 2020 and was 4.0% below levels seen in October 2020, the initial recovery peak. Overall, all main sectors of GDP remained notably below their pre-pandemic (February 2020) levels and all were lower than in October 2020.

The services sector acted as the main drag on growth in January, decreasing by 3.5% as restrictions on activity were reintroduced in response to the coronavirus (COVID-19) pandemic. The services sector was 10.2% below the level of February 2020 compared with 4.9% below the level seen in October 2020.

The production sector fell by 1.5% in January 2021 following eight months of consecutive growth. The sector was 5.0% below its February 2020 level.

The construction sector saw positive growth of 0.9% in January, after a decline of 2.9% in December 2020. The construction sector was 2.6% below the level of February 2020.

GDP contracted by 1.7% in the three months to January 2021, down from a 1.0% growth in the three months to December 2020.