UK economy shrank 2.9 percent in January
UK gross domestic product (GDP) fell 2.9% in January following growth of 1.2% in December as new lockdown measures hit the economy.
The figures, which are much better than initially forecast, still show the economy is 9% down on January last year, before the pandemic reached the UK.
The ONS said the economy took a slump as third national restrictions came into force amid a new Covid variant - with all non-essential shops ordered to close and millions of people told to learn - and work - from home.
The customer-facing services sector saw the heaviest drop, with hospitality and education shrinking by 3.5% during the month. The sector is now 10.2% smaller than it was in February 2020.
UK factories and manufacturing also took a hit, with the industrial output sector down by 1.5% and manufacturing, 2.3%. Construction was the only industry to improve in January.
Releasing figures on Friday, the ONS added that the export of goods from the UK to the European Union fell by nearly 41%, or £5.6billion, in January as the Brexit transition period ended.
Deputy national statistician for economic statistics Jonathan Athow said the 2.9% decline is far lower than the 4.9% economists had predicted.
"The economy took a notable hit in January, albeit smaller than some expected, with retail, restaurants, schools and hairdressers all affected by the latest lockdown.
"Manufacturing also saw its first decline since April, with car manufacturing falling significantly.
"However, increases in health services from both vaccine rollout and increased testing partially offset the declines in other industries.
"Both imports and exports to the EU fell markedly in January, with much of this likely the result of temporary factors. Returns from our more timely surveys and other indicators suggest trading began to recover towards the end of the month."
The Office for Budget Responsibility (OBR) estimates GDP will drop 3.8% in the first quarter before bouncing back by 3.9% in the second quarter, if the Government's vaccination rollout and road map reopening goes to plan. ■