By Ian McConnell
UK private-sector economic activity has plummeted this month at by far the sharpest rate since comparable records began more than two decades ago, amid the coronavirus crisis, a key survey shows.
The composite UK manufacturing and services output index, produced by the Chartered Institute of Procurement and Supply and financial information company IHS Markit, has plunged to just 12.9 from a previous record low of 36 in March on a seasonally adjusted basis. The 50 mark separates expansion from contraction. CIPS noted the decline in April exceeds falls at the height of the 2008/09 global financial crisis by “a wide margin”. Prior to March, the survey record low was 38.1 in November 2008.
The latest “flash” reading, published yesterday, was compiled between April 7 and 21.
CIPS said: “Widespread business shutdowns at home and abroad in response to the...Covid-19 pandemic unsurprisingly resulted in a rapid reduction in UK private sector output during April.”
New orders have also fallen at a record pace this month.
The survey found 81 per cent of UK service providers and 75% of manufacturing companies have experienced a fall in business activity during April, with these declines attributed overwhelmingly to the pandemic.
READ MORE: Ian McConnell: Poorest must not pay the price again after coronavirus crisis
Manufacturers reporting output growth are mostly involved in medical supply chains or producers of food and drink, CIPS noted. In services, CIPS cited “sporadic reports of growth in April among those with major clients in either online retail or the public sector”.
The manufacturing output index has tumbled to 16.6 this month, from 43.9 in March. The services business activity index has plunged to 12.3 from 34.5.
The EY ITEM Club think-tank expects the UK economy to contract around 13% quarter-on-quarter in the three months to June, assuming some lifting of restrictions on activity in this period. It sees UK GDP contracting 6.8% over 2020 as a whole.
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