The sluggish recovery of tourism drags on the UK economy

For the first time since June, the speed of the UK economic recovery from coronavirus dropped behind the global benchmark in October.

According to the latest Lloyds Bank UK Recovery Tracker, the trend has emerged as consumer-facing sectors and their suppliers have grappled with new regulations and declining demand.

The UK reported a reading of 52.1 (down from 56.5 in September), reflecting the economic downturn seen in the midst of a Covid-19 revival across the rest of Europe.

Complying with IHS Markit, the Tracker offers unique insight into the shape and speed of recovery following the Covid-19 disruption.

During October, six of the fourteen UK sectors tracked by the tracker saw production grow faster than the global index.

This is five less than in September, however.

In October, beverages and food (43.5), household goods (45), technical equipment (52.7), chemicals (51.9), real estate (52.4) and banks (55.2) all dropped below the benchmark, while both tourism and leisure (25.5) and transport (43.6) fell further behind.

A reading above 50 signals production is that, while a reading below 50 suggests production is contracting.

In October, tourism and recreation dropped especially sharply behind the global benchmark following the introduction of multiple tiered lockdown steps as new hospitality curfews and social media constraints were implemented.

As a result, drinks and food also dropped dramatically, with suppliers in the sector reporting a decline in pub and restaurant orders.

The most notable upside outlier was metals and mining (70.3), retaining its place as the UK sector farthest ahead of the global benchmark for the second month in a row.

In October, the Global PMI reported a reading of 53.3, up from a revised 52.5 in September and above the reading of 52.1 for the UK.

The key contributor to the growing global benchmark was a vigorous rebound in market activity across the United States (56.3), alongside good results by China (55.7), India (58.0) and Brazil (580). (55.9).

Despite a slowdown in growth, the overall index of the United Kingdom was comparatively high compared to European nations that tightened Covid-19 restrictions earlier, with all production contractions reported by France (47.5), Spain (44.1) and Italy (49.2).

With a steep turnaround in industrial production underpinning the fastest expansion of private sector output since July, Germany was the only nation to defy the downward European trend (55.0).

Jeavon Lolay, Head of Economics and Business Insight, Lloyds Bank Commercial Banking, said: "The data from October shows that the UK's recovery slowed in the third quarter after a strong economic recovery."

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

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