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UK Economy Recovers In February

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The UK economy recovered in February despite the coronavirus lockdown restrictions being in place, data from the Office for National Statistics revealed Tuesday.

Gross domestic product grew 0.4 percent monthly, following a revised 2.2 percent fall in January. Nonetheless, this was slower than the expected growth of 0.6 percent.

February's GDP was 7.8 percent below the levels seen in February 2020, data showed. In the three months to February, GDP shrank 1.6 percent, which was worse than a revised 1.4 percent contraction in the three months to January.

The small rise in GDP does suggest that January was probably the low point of the year, Thomas Pugh, an economist at Capital Economics, said.

Vaccinations and the reopening of the economy will combine to trigger a rapid rebound in activity over the next few months, the economist added.

Driven by wholesale and retail trade, services output gained 0.2 percent in February. This followed a negative 2.5 percent growth in January.

The production sector also grew in February, by 1.0 percent, in contrast to a 1.8 percent fall in January. This was mainly because of manufacturing output picking up for the first time since November. After falling 2.3 percent, manufacturing gained 1.3 percent in February.

Underpinned by new work and repair and maintenance, construction output rose 1.6 percent. Nonetheless, the construction sector was 4.3 percent below the level of February 2020.

On a yearly basis, industrial production fell 3.5 percent after easing 4.3 percent in January. Likewise, the decline in manufacturing output slowed to 4.2 percent from 5.0 percent.

Another report from the ONS showed that the visible trade gap widened to GBP 16.44 billion in February from GBP 12.59 billion in January. On a monthly basis, exports and imports of goods increased 9.9 percent and 17.4 percent, respectively.

At the same time, the surplus on services trade came in at GBP 9.3 billion, largely unchanged from GBP 9.22 billion in the previous month.

As a result, the total trade deficit increased sharply to GBP 7.12 billion from GBP 3.37 billion a month ago.

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