Tourism bounce back before new restrictions
It will be interesting to see the picture when the impact of the rule of six is clearer
TOURISM and hospitality businesses have bounced back strongly since lockdown restrictions were eased with the sector returning to growth for the first time in six months, a new report reveals.
The sectors, key to the South West economy, joined 12 others in the UK that are now outperforming their international counterparts on a series of metrics tracking recovery from Covid-19 in August.
The Lloyds Bank UK Recovery Tracker, created in league with IHS Markit, provides an insight into the shape and pace of the UK’s recovery following the disruption caused by Covid-19 and the subsequent lockdown.
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 sector, which includes hotels, restaurants and leisure facilities, posted a PMI reading of 60 in August, up from 45 in July. A reading of above 50 signals output is rising, while a reading below 50 indicates output is falling.
Restaurants reported support from the Government’s Eat Out to Help Out scheme, which ended in September, 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 (77) and healthcare (71) as the sectors furthest ahead of global benchmarks during August.
The UK automotive industry registered the fastest growth of all sectors as manufacturing plants increased their capacity and consumer demand rebounded.
Healthcare output growth was driven by the restart of private health services and robust demand for pharmaceuticals, PPE and other healthcare products. Chemicals (62) also recorded a strong rise in production volumes.
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 during the second quarter of 2020, the report authors stressed.
All 14 UK sectors monitored by the tracker underperformed against the global benchmark in April.
Many tourism and recreation businesses only started to operate again in July, which helped make the sector’s August rebound in output so sharp.
Travel restrictions and the continued use of work-fromhome policies by businesses meant transport (44) was the only sector to fall behind the global benchmark of recovery in August and register an outright decline in output.
In July, 12 of the 14 sectors monitored by the tracker reported their output rose at a faster pace month-on-month, but in August only seven of the 14 reported that this was the case.
Jeavon Lolay, head of economics and market insight, Lloyds Bank Commercial Banking, said: “The headline findings of this month’s UK Recovery Tracker paint a positive picture, with more domestic businesses outperforming their international counterparts during August.
“However, despite most UK sectors being ahead of the global benchmark, the data shows the recovery of some industries is starting to slow.
“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 is clearer.”