UK business activity slumps to record low - Financial Times

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The coronavirus lockdown has sent manufacturing and services activity in the UK tumbling to the lowest level on record, leading analysts to predict a more severe downturn than “anything seen in living memory”.

The latest IHS Markit/Cips composite purchasing managers’ index for the UK, a measure of economic performance in manufacturing and services, fell to 13.8 in April, the lowest since the survey began more than two decades ago.

“April’s PMI data highlights that the downturn in the UK economy during the second quarter of 2020 will be far deeper and more widespread than anything seen in living memory,” said Tim Moore, economics director at IHS Markit.

“Just one-in-five service providers managed to avoid a drop in business activity since March, and those hardest hit by social distancing measures and travel restrictions often reported complete stoppages of business operations,” he added.

The reading is down from 36 in March, but slightly higher than the early estimates of 12.9. A score below 50 indicates the majority of businesses reporting a deterioration compared to the previous month.

Nearly 80 per cent of survey respondents reported a drop in business activity during April, almost double the survey-record set in March. Respondents “overwhelmingly attributed” the reduced activity levels to business closures, shutdowns among clients or shrinking sales due to a slump in non-essential spending, according to the report.

Before the last two months, the survey’s record low was a reading of 40.1 in November 2008.

Services were the worst performer, with the corresponding index dropping from 34.5 in the previous month to 13.4 in April, the lowest reading since records began in 1996, but slightly above earlier estimates.

The data comes ahead of a Bank of England monetary policy decision in which further measures to support the economy could be announced.

Kallum Pickering, a senior economist at Berenberg, said that the central bank’s Monetary Policy Committee “will likely hold tight for now while re-emphasising that the BoE stands ready to do whatever it takes to meet its 2 per cent inflation target and promote a recovery.”

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UK business activity slumps to record low - Financial Times
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