Strong recovery by key sectors sees UK outpacing Europe

● Tourism and recreation bounce back ● Boost from Eat Out to Help Out scheme

The Eat Out to Help Out scheme and people taking stay cat ions are helping the UK’S tourism and recreation sectors outpace their global counterparts in a strong recover y from Covid-19, according to a report today.

The Bank of Scotland’ s UK Recover y Tracker found that the output of UK businesses in 13 of the 14 sectors monitored by the tracker increased in August, up from 12 sectors in July, as tourism and recreation returned to growth for the first time since February.

The data shows the UK recover y also outpaced Europe in August, registering accelerated growth month-on-month as its recover y from excep - tionally low output levels in the second quarter continued.

The tourism and recreation sector, which includes hotels, restaurants and leisure facilities, posted a purchasing managers’ index reading of 60 in August, up from 45 in July, according to the report compiled with IHS Markit.

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

Restaurants reported support from the UK government’s Eat Out to Help Out scheme, which ended on 31 August, and businesses that focus on domestic tourism reported a benefit from an increase in people taking staycations. Tourism and recreation joined automobiles and auto parts and healthcare as the sectors furthest ahead of global benchmarks during August.

Healthcare output growth was driven by there start of private health services and robust demand for pharmaceuticals, personal protective equipment and other healthcare products. Chemicals also recorded a strong rise in production volumes.

However, the report’ s authors cautioned that, while the vast majority of UK sectors outperformed their international counterparts in August, this should be viewed in the context of the historic lows recorded in the second quarter. Many tourism and recreation businesses only started to operate again in July, which helped make the sector’s August rebound in output so sharp.

Jeavon Lolay at Lloyds Bank Commercial Banking said the headline findings paint a positive picture, with more domestic businesses outperforming their international counterparts in August.

“However, despite most UK sectors being ahead of the global benchmark, the data shows the recover y of some industries is starting to slow.

“It’s worth noting that other European countries have already experienced as lowdown in their performance as they navigate further outbreaks of Covid-19 and additional measures to stop the pandemic’s spread.

“It will be interesting to see the picture in September when the Eat Out to Help Out scheme has ended and the impact of the ‘rule of six’ on sectors that rely on social interaction, such as tourism and recreation, is clearer,” he added.