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More startling @ONS monthly GDP data out this morning (for June and our first look at Q2).
Despite the strongest *monthly* growth rate on record at 8.7%, Q2 as a whole was -20.4%, confirming the UK has entered recession.
A short thread on this morning’s data…
Despite the strongest *monthly* growth rate on record at 8.7%, Q2 as a whole was -20.4%, confirming the UK has entered recession.
A short thread on this morning’s data…
The good news was that today’s outturn was a touch stronger than expected (the 20.4% fall was slightly less dire than the -21% nowcast from the @bankofengland last week, for example).
But the first half of this year as a whole looks to have been one of the weakest we have data for (based on numbers from the OECD).
So while the UK economy is recovering, there is a bigger hill to climb here than for most other rich countries given a larger economic hit.
So while the UK economy is recovering, there is a bigger hill to climb here than for most other rich countries given a larger economic hit.
The 8.7% monthly jump in output for June was ~3.5 times stronger than the previous record (set last month!) and leaves monthly GDP at 2010 levels.
This chart shows how the sectors have fared. Red bars show the fall in GVA between Feb and Apr; blue bars show the subsequent bounce back to June.
Dramatic bounce backs in some sectors, including hospitality which recorded a rise of nearly 70% in June alone.
Dramatic bounce backs in some sectors, including hospitality which recorded a rise of nearly 70% in June alone.
Note of caution on these volatile data: first estimates are revised as new info comes in. This is compounded by higher non-response in the current situation. ONS have tried to plug the gap, but these data are obv particularly uncertain.
For more, see: https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/articles/coronavirusandtheeffectsonukgdp/2020-05-06
For more, see: https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/articles/coronavirusandtheeffectsonukgdp/2020-05-06
Productivity data also volatile - weakest ever in heads space.
More sensible to look at hours which have been falling slightly less quickly than GDP, meaning productivity growth has fallen back.
This is a similar patter to the financial crisis.
More sensible to look at hours which have been falling slightly less quickly than GDP, meaning productivity growth has fallen back.
This is a similar patter to the financial crisis.
Its important to keep in mind that today's data tell us more about the impact of lockdown than how durable the recovery will be.
Indeed, with many firms unable to operate as normal – and heightened uncertainty about prospects for the health crisis – the recovery will take time.
Indeed, with many firms unable to operate as normal – and heightened uncertainty about prospects for the health crisis – the recovery will take time.
The big risk here is a large and persistent rise in unemployment.
The Government’s priority should be providing support to the hardest-hit parts of the economy, supporting jobs while also helping those unlucky enough become unemployed.
Here’s how: https://www.resolutionfoundation.org/publications/easing-does-it/
The Government’s priority should be providing support to the hardest-hit parts of the economy, supporting jobs while also helping those unlucky enough become unemployed.
Here’s how: https://www.resolutionfoundation.org/publications/easing-does-it/
