The UK economy grew by 6.6 per cent in July but the recovery slowed down leaving output substantially below pre-pandemic levels, official data showed.
Economists had forecast a 6.8 per cent increase.
Gross Domestic Product (GDP) rose for the third successive month but the UK has regained only around half of the output lost during lockdown. The economy is 11.7 per cent below the peak reached before the coronavirus pandemic began, the Office for National Statistics said.
Growth was recorded in all major sectors of the economy as lockdown restrictions eased further in July. Construction enjoyed the strongest expansion with output rising 17.6 per cent in July, however it remains 11.6 per cent below February’s level.
The production sector, which includes manufacturing, reported output 7 per cent below pre-Covid levels after it grew by 5.2 per cent in July following an increase in manufacturing.
The services sector, which makes up almost four fifths of the UK economy, lagged behind, seeing a 6.1 per cent in July, below analysts’ predictions.
Education grew strongly as some children returned to school, while pubs, campsites and hairdressers all saw notable improvements.
However, the performance of services businesses overall will give cause for concern for ministers given the number of people employed in the sector.
Many service sector jobs, such as those in hospitality and leisure, rely on face-to-face contact. With case numbers rising again, the prospect of renewed restrictions is creating uncertainty for many services businesses.
The figures do not show the benefit of a popular government scheme to subsidise meals in restaurants which ran in August.
ONS director of economic statistics Darren Morgan said: “While it has continued steadily on the path towards recovery, the UK economy still has to make up nearly half of the GDP lost since the start of the pandemic.
“Car sales exceeded pre-crisis levels for the first time, with showrooms having a particularly busy time.
“All areas of manufacturing, particularly distillers and car-makers, saw improvements, while house-building also continued to recover.”
James Smith, research director at the Resolution Foundation think tank, said: “The UK economy continued to rebound over the summer as lockdown restrictions eased.
“But it’s the level of activity that matters, which remains hugely down on pre-pandemic levels.
“More worryingly, the rise in Covid cases and return of public health restrictions means we are coming towards the end of the easy economic wins from restarting activity.
“With emergency support to firms and workers being withdrawn, far tougher times lie ahead this autumn.”