According to the latest Lloyds Bank UK Recovery Tracker, strong consumer demand for large-scale events and "the easing and simplification of international travel rules" drove the recovery across tourism and recreation, which includes the combined output from pubs, hotels, restaurants, leisure facilities and travel agents.
Lloyds said the easing of travel rules led to both more overseas holiday bookings and inbound business. Its tracker monitors 14 sectors in total, 10 of which reported output growth in September, up from nine in August.
Additionally, tourism and recreation in September was the only service-led sector to record its strongest month compared to pre-pandemic highs. Manufacturing sectors, by contrast, have been hit by staff and material shortages, which have resulted in service sectors outperforming manufacturers by the greatest extend since January.
One constant, though, across all sectors is rising prices – all 14 sectors tracked by Lloyds upped prices in September, with Lloyds attributing the spike to the rate of input cost inflation.
Jeavon Lolay, head of economics and market insight at Lloyds Bank Commercial Banking, said: “While the number of sectors in growth mode increased last month, we are now firmly in an economic phase of recovery where big leaps in activity won’t happen every month. Tourism and recreation outpaced other sectors in September because it continues to benefit from relaxations in Covid-19 restrictions and resurgent consumer demand.
“As the UK economy continues to inch towards its pre-pandemic peak, logistical challenges, higher energy prices and uncertainty relating to the path of the virus as we head into winter are key risks. Policymakers will need to tread carefully in order to safeguard the recovery, with important fiscal and monetary policy decisions due in the coming weeks and months.”