Thread by @jathers_ONS

Thread on today’s @ONS economic data, and what this means for the economy 👇

As was expected, we saw a huge fall in economic activity in April, down 20% compared to March. Taking March and April together, the fall was 25%: in two months the economy shrank by a quarter. (1/n)

At risk of stating the obvious, the size and suddenness of the fall in economic activity is completely unprecedented. The biggest fall before the coronavirus was just over 2%. (2/n)

The fall was widespread with even areas of the economy that one might have thought would have been less affected such as information and communications, or professional services seeing falls in activity. (3/n)

But there was also a high degree of unevenness in the impact in April. It is not surprising to see air travel output down 90%, but there were also steep falls in construction (down 40%) and manufacturing, with car/vehicle output down 90%. (4/n)

There have also been some knock-on effects to other parts of the economy. With less construction and manufacturing, waste treatment and recycling has fallen. (5/n)

There were very few bright spots, but the pharmaceutical industry did see growth, partly due to the increased need for drugs and chemicals to deal with the coronavirus. (6/n)

There have also been some surprises with the food and drink industry seeing lower output. This appears to be because businesses that were oriented towards the hospitality sector i.e. selling to restaurants/pubs, saw activity fall. (7/n)

Even the drinks industry has been affected: 23% of breweries and 17% of distilleries reported no turnover (i.e. likely not trading), though this appeared to mainly be smaller companies. (8/n)

International trade took a big hit with reductions in both exports and imports, with lower trade in cars, fuel and clothing. With a slightly larger fall in exports compared to imports, the trade deficit edged up. (9/n)

What does all this mean for the size of the economic shock and future economic growth? (10/n)

The economic damage will be a combination of how far economic activity falls AND the length of the downturn. (A longer downturn might also have longer-lasting ‘scarring’ or ‘hysteresis’ effects on the economy too.) (11/n)

So it is likely to be far too early to judge whether the economic outlook is better or worse than various scenarios that have been presented. (12/n)

It is likely that April will be the low point of economic activity. Our own Business Impact of Coronavirus survey (BICs) has shown that more businesses opened up through May. Other surveys/indicators suggest some pick up in economic activity. (13/n)

ons.gov.uk/peoplepopulati…

Exactly how quick economic activity will grow will depend on how quickly the restrictions are lifted, the course of the pandemic, wider economic policies and underlying factors such as consumer confidence and international trade. (14/n)

Our monthly publication cycle for GDP means we will get a regular flow of information on the economy. (Most countries only publish GDP quarterly.) Today’s releases can be found here: (15/n)

ons.gov.uk/releases/gdpmo…
ons.gov.uk/releases/coron…

Finally, given the huge challenges in measuring economic activity at the moment, there is much more uncertainty than usual about our figures and scope for more revisions than normal. (ENDS)