Ruth Lea CBE has been Arbuthnot Banking Group’s Economic Adviser since 2007 and was an Independent Non-Executive Director from 2005-2016.

Ruth co-founded Global Vision in 2007 and was Director until 2010, and was previously the Director of the Centre for Policy Studies (from 2004 to 2007), Head of the Policy Unit at the Institute of Directors (from 1995 to 2003) and Economics Editor at ITN (from 1994 to 1995).  Prior to ITN she was Chief UK Economist at Lehman Brothers, Chief Economist at Mitsubishi Bank, worked for 16 years in the Civil Service (the Treasury, the DTI, the Civil Service College and the Central Statistical Office) and was an economics lecturer at Thames Polytechnic (now the University of Greenwich).

She is the author of many papers and articles on economic issues and has been a Governor of the London School of Economics and Council Member of the University of London.

Tel: 020 8346 3482
Mobile: 07800 608 674
Email: ruthlea@arbuthnot.co.uk

 

From the desk of Ruth Lea

Economic insight and financial comment related to the ever-changing financial landscape and the economic world at large.

Economic Perspectives

6th July 2020

Economic Insight - 6 July 2020

A welcome easing of lockdown restrictions, but still more to do
In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest easing of lockdown conditions and recent economic developments:
Press Release

A welcome easing of lockdown restrictions, but still more to do

Date: 6th July 2020

A welcome easing of lockdown restrictions, but still more to do
In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest easing of lockdown conditions and recent economic developments:
    • Relaxations in lockdown restrictions went ahead on 4 July as planned, enabling places including pubs, restaurants, hotels and hairdressers to open (England).
    • The Prime Minister recently announced plans to accelerate £5bn of spending on infrastructure projects. A new Infrastructure Delivery Taskforce (“Project Speed”) is to be set up.
    • The Chancellor is due to make an economic statement on 8 July to update his plans for steering the economy through the next stages of the coronavirus crisis. It is expected to focus on employment issues, with pledges to boost jobcentres.
    • There have been some further modest signs of economic recovery reported. According to the ONS’s BICS the proportion of businesses trading continues to rise. And Markit’s June PMIs for manufacturing and services confirmed sharp improvements in activity compared with May.
    • The ONS revised 2020Q1’s fall in GDP to 2.2% (QOQ). The households’ saving ratio rose to 8.6% in 2020Q1, compared with 6.6% in 2019Q4, as households reduced their spending.
    • The Bank’s data on consumer credit, showed households repaid a further £4.6bn in May, following £7.4bn (a record) in April and £3.8bn in March. The growth rate fell to negative 3.0% (YOY), compared with April’s negative 0.4% and March’s 3.6%.
    • Oil prices fell very sharply in the first four months of 2020, but partly recovered in May after production cuts were agreed. In June, Brent oil futures were reasonably stable at around $40pb.
    Concerning Brexit:
    • Meetings between the UK and EU negotiators on the future UK-EU relationship took place w/c 29 June. There appeared to be little progress.
    • Meetings will continue w/c 6 July.
    Ruth Lea said, “Whilst welcoming the recent easing in lockdown restrictions, restrictions remain material and continue to bear down on economic activity. Certain businesses are still unable to open and the social distancing rules, albeit relaxed, remain problematic for some key services industries. There is, therefore, more to be done before the economy is completely liberated. The remaining restrictions are especially difficult for the “face-to-face” sectors of the economy, including hospitality and the arts.”


For full story: http://www.arbuthnotgroup.com/economic_perspectives_group.html

Press enquiries:

Arbuthnot Banking Group PLC:

Ruth Lea, Economic Adviser
07800 608 674, 020 8346 3482
ruthlea@arbuthnot.co.uk
Follow Ruth on Twitter @RuthLeaEcon

Maitland:
Sam Cartwright
020 7379 4415
Jais Mehaji
020 7379 5151
arbuthnot@maitland.co.uk
Download full article

29th June 2020

Economic Insight - 29 June 2020

Coronavirus crisis: further easing of lockdown restrictions
In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest easing of lockdown conditions and recent economic developments:
Press Release

Coronavirus crisis: further easing of lockdown restrictions

Date: 29th June 2020

Coronavirus crisis: further easing of lockdown restrictions
In this Perspective Ruth Lea, Economic Adviser to the Arbuthnot Banking Group, discusses the latest easing of lockdown conditions and recent economic developments:
    • The Prime Minister announced a further easing of lockdown conditions on 23 Jun.
    • Places including pubs, restaurants, hotels and hairdressers will be able to open from 4 July (in England), when social distancing rules will be eased. But many places will remain closed including beauty salons, indoor gyms and sports facilities, and exhibition and conference centres.
    • Markit’s flash PMI for June suggested a further improvement in activity, with manufacturing recovering quicker than services.
    • May’s data for car production and sales of residential properties were extremely weak. Car production barely increased in May (MOM) and was down 95% (YOY), whilst residential sales were down by nearly 50% (YOY).
    • The latest data relating to the Government’s wide-ranging coronavirus support measures show the mounting costs of these schemes. By 21 June, the total value of claims was nearly £23bn under the Coronavirus Job Retention Scheme and over £7½bn under the Self-Employment Income Support Scheme.
    • In addition, by 21 June businesses had borrowed over £40bn through the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLIBLS) and the Bounce Back Loan Scheme (BBLS), with the BBLS accounting for over £28bn.
    Concerning international developments:
    • Markit’s flash PMIs for the Eurozone and the US showed significant improvements in June.
    • The IMF’s downgraded its GDP projections in its June update, forecasting a fall in world GDP of 4.9% in 2020 (from 3.0% in April).
    Forecasts for the UK compared:
    • The IMF forecast a fall in the UK’s GDP of 10.2% (6.5% in April) for 2020, which compares with the OECD’s expectation of 11.5% (June) and the European Commission’s expectation of 8.3% (May).
    • The OBR’s coronavirus reference scenario (April) projected a fall in GDP of 12.8% for 2020, whilst the Bank’s illustrative scenario (May) projected a fall of 14%.
    • Both the OBR (in July) and the Bank (in August) will be modifying their scenarios in the light of recent “better-than-expected” GDP data. It is not unreasonable to suggest that they may modify the expected GDP fall in 2020 to, say, 10-11%.
    Concerning Brexit:
    • The next round of UK-EU negotiations on the UK-EU Future Relationship will take place in the week beginning 29 June. Issues to be discussed include the contentious issues of the “level playing field” and fisheries.
    • Separately, the Department for International Trade (DIT) is making progress in negotiating trade agreements with non-EU countries.
    Ruth Lea said, “The encouraging news is that there is a further easing of lockdown conditions in the pipeline, but there are still many restrictions on parts of the economy. Also encouragingly, Markit’s June PMI suggested some further recovery in activity. However, the appalling car production and residential sales data for May remind us that there are still major problems facing the economy. Similarly, the costs of the Government’s support schemes continue to climb inexorably, adding to public sector debt.”


For full story: http://www.arbuthnotgroup.com/economic_perspectives_group.html

Press enquiries:

Arbuthnot Banking Group PLC:

Ruth Lea, Economic Adviser
07800 608 674, 020 8346 3482
ruthlea@arbuthnot.co.uk
Follow Ruth on Twitter @RuthLeaEcon

Maitland:
Sam Cartwright
020 7379 4415
Jais Mehaji
020 7379 5151
arbuthnot@maitland.co.uk
Download full article

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Comment, at a glance

Halifax
house prices slip further in June
7 July 2020

According to the Halifax, house prices slipped just 0.1% (MOM) in June, after falling 0.2% in May, 0.6% in April and 0.3% in March. They were, however, 2.5% higher (YOY). Moreover, Halifax noted that “…activity levels bounced back strongly in June, which is typically the busiest month for mortgage activity in the UK. New mortgage enquiries were up by 100% compared to May, and with prospective buyers also revisiting purchases previously put on hold, transaction volumes rose sharply compared to previous months. However, whilst encouraging, it remains too early to say if this level of activity will be sustained.

House-moving restrictions were initially introduced by the Government on 23 March (updated on 26 March) in response to the COVID-19 pandemic. The Government advised “house moves should be delayed unless moving is unavoidable”. The restrictions were relaxed on 13 May (in England). 

Halifax, “House prices fall for fourth straight month – but new mortgage enquiries surge”, 7 July 2020.

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Labour productivity (output per hour) fell 1.3% (QOQ) in 2020Q1
7 July 2020

The ONS has released its flash productivity estimates for 2020Q1 (labour productivity table 1):
·       Output per hour (the main measure of labour productivity, “productivity hours”) fell 1.3% (QOQ) in 2020Q1, to be 0.6% lower (YOY). The YOY fall reflected the fact that gross value added (GVA) declined faster (-1.7%) than hours worked (-1.2%).
·       Output per worker fell 2.8% (QOQ) in 2020Q1, and was down 3.1% (YOY). The falls in output per worker were, therefore, greater than for output per hour. The ONS explained “…the government’s “furlough” schemes have resulted in a disparity between output per hour and output per worker…because the schemes have caused employment to stay in line with pre-pandemic levels, whereas hours worked has fallen”.
·       Unit labour costs increased by 6.2% (YOY) in 2020Q1, the greatest change since 2006Q4. Government programmes for furloughed workers helped keep labour costs elevated despite the fall in GVA.

 

Source: ONS, “UK productivity: 2020Q1”,7 July 2020.

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Markit surveys show marked recovery in June
6 July 2020

Markit surveys for the three major sectors suggested that there was a significant recovery activity in in June, after some improvement in May.

·       The manufacturing PMI rose to 50.1 in June, after May’s 40.7. Markit noted “…manufacturing production rose slightly for the first time in four months during June, as factories restarted, clients reopened and lockdown restrictions were eased. The intermediate goods sector saw the steepest growth, while consumer goods producers saw only a mild expansion. In contrast, investment goods output fell again, albeit at a vastly reduced pace.”
·       The services PMI rose to 47.1 in June, after May’s 29.0. Markit commented “…respondents again cited highly subdued demand and disruptions related to the COVID-19 pandemic as factors constricting business activity in June. However, there were also reports that an easing of lockdown measures and reopening of the UK economy had a favourable impact on business activity”. 
·       The composite index improved to 47.7 in June, compared with May’s 30.0. Granted this index (and the services index) remained below the crucial 50-mark that separates expansion from contraction. But the PMIs need careful interpretation, useful indicators though they are. Experience of 2008-09 (the Great Recession) suggests that in “extreme conditions” the PMIs could be a better guide to turning points in activity rather than to growth rates, and there is little doubt that the current situation is extreme. In other words, June’s improved PMIs are likely to be indicating some further upturn in activity (rather than slowing decline) after tentative signs of some upturn in activity in May.
·       The construction PMI jumped to 55.3 in June, compared with 28.9 in May, to signal a strong increase in total construction output. Moreover, the latest reading signalled the steepest pace of expansion since July 2018. Higher levels of business activity were overwhelmingly linked to the reopening of the UK construction supply chain following stoppages and business closures during the early stages of the coronavirus disease 2019 (COVID-19) pandemic. Residential building was the best-performing area of construction activity in June, though there were also improvements in commercial work and civil engineering activity.

 

Sources: Markit/CIPS manufacturing PMI, “UK manufacturing stabilises in June following severe COVID-19 downturn”, 1 July 2020; (ii) Markit/CIPS services PMI, “Services PMI data continue to improve from April’s survey-record low”, 3 July 2020; (iii) Markit/CIPS Construction PMI, “Strong rebound in UK construction output as reopening gathers pace during June”, 6 July 2020.

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ONS’s latest BICS
further marginal pick-up in proportion of businesses trading
2 July 2020

The latest BICS (Business Impact of Coronavirus (COVID-19) Survey) release related to the final results for the period 1-14 June (BICS Wave 7).

Key results were:

·       Trading: of all responding businesses, 80% had been trading for more than the last two weeks, while 6% had started trading again within the last two weeks after a pause in trading.

·       Workforce: of the businesses trading, 6% of their total workforce had returned from furlough in the last two weeks, while 2% returned from remote working to their normal workplace.

·       Turnover: 64% of businesses trading reported that their turnover was below normal expectations for this time of year. The main sectors to have reported that their turnover decreased by more than 50% were the arts, entertainment and recreation sector (58%); the accommodation and food service activities sector (52%); and the construction sector (32%).

·       Capital spending: 42% of businesses continuing to trade said that capital expenditure had stopped or was lower than normal because of the coronavirus (COVID-19).

 Source: ONS, “Coronavirus and the economic impacts on the UK,” 2 July 2020.

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The current account deficit widened in 2020Q1
30 June 2020

The current account of the balance of payments deficit widened to £21.1bn (3.8% of GDP) in 2020Q1, compared with £9.2bn (1.7% of GDP) in 2019Q4, a deterioration of £11.9bn.

The widening in the current account deficit, however, reflected large movements in precious metals (including non-monetary gold (NMG)). The ONS said that the “underlying” current account deficit “excluding NMG and other precious metals” narrowed slightly to £19.9bn (or 3.6% of GDP) in 2020Q1, a narrowing of £1.3bn.


More specifically in 2020Q1:

·       The goods deficit widened to £29.3bn (from £15.4bn in 2019Q4), as exports fell faster than imports (the exports figure was distorted by movements in precious metals). The ONS commented that there was evidence that COVID-19 was starting to impact on global supply chains in late 2020Q1, with many businesses reporting notable falls in trade during March 2020.

·       The services surplus rose to £28.1bn (from £23.8bn in 2019Q4), as imported services fell more sharply than exported services. There was a noted decline in the imports of “other business” services, whilst both imports and exports of travel services fell as governments around the world introduced travel bans to stem the spread of COVID-19.

·       Taking goods and services together, there was a total trade deficit of £1.2bn in 2020Q1, compared with a surplus of £8.4bn in 2019Q4.

·       The primary income (mainly investment income) deficit deteriorated to £13.6bn in 2020Q1 (-£11.2bn in 2019Q4). The ONS said the UK’s credits declined more than debits in 2020Q1 as other countries locked down sooner than the UK, with anecdotal evidence highlighting that businesses distributed less earnings to preserve cash buffers through the pandemic.

·       The secondary account (current transfers) deficit was little changed at £6.3bn (£6.4bn in 2019Q4).

 

The current account deficit with the EU fell to £24.1bn in 2020Q1 (£30.4bn in 2019Q4), whilst the non-EU surplus fell to £2.9bn (£21.1bn in 2019Q4).

 

Source: ONS, “Balance of payments: 2020Q1”, 30 June 2020.

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GDP fell 2.2% (revised) in 2020Q1
30 June 2020

GDP fell 2.2% (QOQ) in 2020Q1, the largest decline since 1979Q3, when it also fell 2.2%. The YOY contraction was 1.7%. The estimate 2020Q1 captures the first direct effects of the coronavirus (COVID-19) pandemic, and the government measures taken to reduce transmission of the virus. The ONS revised GDP growth in 2019 to 1.5% (YOY, from 1.4%)

 There was widespread disruption to economic activity in 2020Q1. Concerning the industrial breakdown (table B1):
·        Services output contracted by 2.3% (QOQ) in 2020Q1. The fall reflected declines in the output of most industries, notably in education, wholesale and retail trade and repair of motor vehicles and motorcycles, food and beverage, accommodation and travel agencies. A small number of sub-industries, such as computer programming, showed an increase in output.
·       Production output fell by 1.5% (QOQ), marking its fourth consecutive quarterly decline, reflecting falls in mining and quarrying (-2.2%), manufacturing (-1.1%) and electricity, gas et al (-5.8%, driven by a fall in industrial demand for electricity caused by the temporary closures of businesses). Water supply et al rose (+0.4%).
·       The 1.1% (QOQ) fall in manufacturing was driven by decreases in the manufacture of transport equipment, machinery and equipment (nec) and textiles. This was partially offset by increases in the manufacture of pharmaceutical, chemical, wood, and rubber and plastic products. Specifically, transport equipment fell by 7.2% (QOQ), largely reflecting a 15.2% decline in motor vehicle manufacturing caused by factory shutdowns in March in response to the coronavirus pandemic. Pharmaceutical products increased by 12.5% (QOQ), driven by stronger than usual demand for medicinal products.
·       Construction output fell by 1.7% (QOQ), reflecting monthly declines in both February (poor weather) and March (the containment measures affecting labour availability).


Concerning the expenditure components, private consumption, government consumption and net trade had a negative contribution to growth in 2020Q1, with only gross capital formation (GCF) contributing positively to growth (table C2):
·       Household consumption fell by 2.9% (QOQ), the largest contraction since 1979Q3. The contraction reflected falls in spending on transport, restaurants and hotels, and clothing and footwear. However, these falls were partially offset by higher spending on food and drink, and to a lesser extent, net tourism, and alcohol and tobacco.
·       General consumption decreased by 4.1% (QOQ), reflecting declines in health and education expenditure. Government healthcare consumption fell by 6.2%, relating to the postponement or cancellation of healthcare treatments as the NHS increased its critical care capacity in its response to dealing with the pandemic. Education fell 6.4%, as a result of school closures across the UK, with schools closed to all from 23 March, except for vulnerable pupils or those whose parents or guardians are key workers. The ONS includes the education consumed by pupils who were learning at home using materials provided by teachers.

·        Gross capital formation (GCF) comprises gross fixed capital formation (GFC), stock-building, statistical adjustments and the net acquisition of valuables.
·        Gross fixed capital formation (GFCF) fell by 1.1% (QOQ), reflecting declines in government investment, dwellings investment and business investment. Business investment fell 0.3% (QOQ), reflecting falls in investment in other buildings and structures as well as transport equipment, though these were partially offset by increases in investment in information and communication technology (ICT) equipment, and other machinery and equipment.
·        There was also substantial destocking in 2020Q1, led by a fall in the level of stocks held within the wholesale and retail trades.
·        But there was a very large (positive) swing in the net acquisition of valuables in 2020Q1, following a large negative entry in 2019Q4, which reflected the large non-monetary gold exports (which was offset in the trade in goods figures). And there was also a large (positive) swing in the statistical adjustments in 2020Q1.

·        There was a marked deterioration in the external balance. The trade deficit was £0.9bn (constant prices) in 2020Q1, whilst in 2019Q4 there had been a trade surplus (£6.6bn), although this was largely driven by movements in precious metals, which include non-monetary gold (NMG). Export volumes declined by 13.5% (QOQ), whilst import volumes fell by 9.4%. The ONS noted that the coronavirus pandemic has led to a marked fall in global trade demand, whilst restrictions have also disrupted international supply chains that might have impacted on the trade intensity of demand.


The households’ saving ratio increased markedly to 8.6% in 2020Q1, compared with 6.6% in 2019Q4, as households reduced their consumption spending by £9.5bn (-2.7%). Before adjusting for inflationary effects, this was the largest quarterly fall in household spending since quarterly records began in 1955 and was driven by large falls in expenditure on motor vehicles, restaurants and hotels, and clothing and footwear.

Source: ONS, “GDP quarterly national accounts, UK: 2020Q1”, 30 June 2020.

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Further repayment of consumer credit in May, and mortgage approvals fell further
29 June 2020

Concerning lending to individuals the Bank of England announced: 
·       Households repaid a further £4.6bn of consumer credit (net) in May, following the record repayment of £7.4bn in April and a repayment of £3.8bn in March. (Money and credit statistical release, table B). The growth rate fell to negative 3.0% (YOY), compared with April’s negative 0.4% and March’s 3.6%. There were repayments on both credit card lending (£1.8bn) and other forms of consumer credit (£2.8bn).
·       Weakness in the housing market associated with COVID-19 continued in May. The number of mortgage approvals for house purchase fell further, to 9,300, over 85% below the February level (73,700). This was the lowest since the series began in 1993. Approvals for re-mortgage fell by less, to 30,400 in May, compared with February’s 52,000. Total mortgage approvals (which also include an “other” component) were 45,600 in May, compared with 56,200 in April and 140,000 in February.
·       Net mortgage borrowing by households increased by a modest £1.2bn in May, after a flat figure in April, and an increase of £5.0bn in March. The annual growth rate for mortgage borrowing slipped to 3.1% (3.3% in April) (table D). Mortgage borrowing tends to lag approvals.

Concerning bank lending to non-financial businesses, which includes lending to businesses in the public sector (table G):
·       Loans (net) to SMEs increased to £18.2bn in May, as new borrowing increased sharply. Before May 2020, the largest monthly amount of net borrowing by SMEs was £0.6bn, in September 2016. This increase probably reflected businesses drawing down loans arranged through government-supported schemes such as the Bounce Back Loan Scheme (BBLS). The growth rate shot up to 11.9% (YOY) in May, compared with 1.1% in April.
·       Loans (net) to large businesses, in contrast, fell £12.9bn in May following strong borrowing in March and April. Around half of the net repayment in May was from the public administration and defence industry, which saw strong borrowing in April. The manufacturing, and wholesale and retail trade industries also made large net repayments. The May figure was the highest net repayment from large businesses since the series began in 2011. The growth rate fell to 10.8% (YOY) in May, compared with 15.4% in April. But, given strong borrowing in March and April, it remained much stronger than the annual growth rate of around 5% in late 2019.

Source: Bank of England, “Money and credit: May 2020”, 29 June 2020.

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ONS’s latest BICS
further marginal pick-up in proportion of businesses trading
25 June 2020

The latest BICS (Business Impact of Coronavirus (COVID-19) Survey) release related to the initial results for the period 1-14 June (BICS Wave 7).

Key results were:
·       Trading: of all responding businesses, 86% of businesses were trading, with 79% trading for more than the last two weeks, while 6% had started trading again within the last two weeks after a pause in trading (rounding errors).
·       Workforce: of the businesses trading, 7% of their total workforce had returned from furlough in the two weeks prior to completing the questionnaire, while 2% returned from remote working to their normal workplace.
·       Turnover: 64% of businesses trading reported that their turnover was below normal expectations for this time of year.
·       Capital spending: 43% of businesses continuing to trade said that capital expenditure had stopped or was lower than normal because of the coronavirus (COVID-19).

Source: ONS, “Coronavirus and the latest indicators for the UK economy and society”: 25 June 2020.

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Markit/CIPS flash composite index
great improvement in June
23 June 2020

The Markit/CIPS flash UK composite output index showed a marked improvement in June, rising to 47.6, compared with May’s 30.0 (final). This marks the slowest pace of decline since the start of the downturn in March. Private sector firms also signalled a rebound in business expectations for the year ahead.

The Markit/CIPS flash UK services PMI recovered to 47.0 in June, compared with May’s 29.0. Around 33% of the survey panel recorded a fall in business activity during June, while only 28% signalled an expansion. This was an improvement on the situation in May, when more than half of all respondents reported a drop in activity and just 13% experienced a rise. Financial Intermediation was the best performing area of activity in June, followed by Transport & Communication Services, with survey respondents commenting on a boost to demand following the gradual restart of activity across the UK economy. Meanwhile, overall service sector output was held back by business closures in the Hotels, Restaurants & Catering category and another steep downturn signalled by Business-to-Business service providers.

The manufacturing output index was 50.8 in June, above the 50.0 no-change threshold, compared with May’s 35.0. Higher volumes of production were linked to a partial reopening of manufacturing plants. However, total new orders continued to decline in June, with manufacturers often commenting on shortages of new sales to replace completed contracts. Survey respondents cited particularly weak demand across the automotive and aviation sectors in June.

Markit commented “…June’s PMI data add to signs that the economy looks likely return to growth in 2020Q3, especially given the further planned easing of the lockdown from 4 July”. “Our forecasting team expects the economy to contract by 11.9% this year before expanding by a relatively modest 4.9% in 2021, which is far more cautious than the 15% surge anticipated in 2021 by the Bank of England.”

Source: Markit/CIPS flash UK composite PMI, “Manufacturing sector leads turnaround in momentum across UK economy in June”, 23 June May 2020. The Composite Output Index is a weighted average of the UK Manufacturing Output Index and the UK Services Business Activity Index (PMI).

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Retail sales partly recovered (+12%) in May
19 June 2020

Retail sales volumes partly rebounded in May 2020 with an increase of 12.0% (MOM) compared with April’s fall, but sales were still down by 13.1% on February before the impact of the coronavirus (COVID-19) pandemic. They were down 13.1% (YOY). Retails sales fell by around 18% (MOM) in April, and 5% (MOM) in March.

Non-food stores provided the largest positive contribution to the monthly growth in May 2020, aided by a strong increase of 42.0% in household goods stores, with the opening of hardware, paints and glass stores reflected in this sector. While there was a strong increase in the volume of fuel sales in May 2020, levels still remain 42.5% lower than February 2020, before government travel restrictions were in place.

The proportion spent online increased further in May 2020 to 33.4%, which compares with the 30.8% reported in April 2020. There was a larger uptake of online spending for food, which reached record proportions, from 9.3% in April to 11.3% in May. Clothing and other non-food stores both also increased their proportion of online retailing in May to record levels. Feedback from a number of these stores reported to have opened their online sites in May after a pause in trading in April.

In the three months to May, sales decreased by a record 12.8% (QOQ), with declines across all stores except food and non-store retailing. They were down 13.3% (YOY).

Source: ONS, “Retail sales, May 2020”, 19 June 2020. 

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