GDP monthly estimate, UK: July 2020

Statistician’s comment

Commenting on today’s GDP figures for July, ONS director of economic statistics Darren Morgan said:

“While it has continued steadily on the path towards recovery, the UK economy still has to make up nearly half of the GDP lost since the start of the pandemic.

“Education grew strongly as some children returned to school, while pubs, campsites and hairdressers all saw notable improvements. Car sales exceeded pre-crisis levels for the first time with showrooms having a particularly busy time.

“All areas of manufacturing, particularly distillers and car makers, saw improvements, while housebuilding also continued to recover. However, both production and construction remain well below previous levels.”

Monthly gross domestic product (GDP) grew by 6.6% in July 2020 as lockdown measures continued to ease, following growth of 8.7% in June and 2.4% in May and a record fall of 20.0% in April 2020.

July 2020 GDP is now 18.6% higher than its April 2020 low. However, it remains 11.7% below the levels seen in February 2020, before the full impact of the coronavirus pandemic. For more detail on the monthly data, please refer to Section 3.

Figure 2: GDP fell by 7.6% in the three months to July, following two consecutive quarterly falls

UK gross domestic product (GDP) growth, Quarter 1 (Jan to Mar) 2005 until May to July 2020

Notes:

1. Q1 refers to Quarter 1 (Jan to Mar), Q2 refers to Quarter 2 (Apr to June), Q3 refers to Quarter 3 (July to Sep), Q4 refers to Quarter 4 (Oct to Dec).
2. Rolling three-month estimates are calculated by comparing gross domestic product (GDP) in a three-month period with GDP in the previous three-month period. For example, GDP May to July compared with the previous February to April.

Download the data

.xlsx

Gross domestic product (GDP) fell by 7.6% in the three months to July 2020 following two consecutive quarterly falls, as government restrictions on movement dramatically reduced economic activity.

Rolling three-month growth is based on output gross value added (GVA). There will therefore be discrepancies in the time series with our quarterly estimates of GDP, which include information on the expenditure and income approaches to measuring GDP.

Monthly gross domestic product (GDP) grew by 6.6% in July 2020, following growth of 8.7% in June 2020. Despite this, the level of output did not fully recover from the record falls seen across March and April 2020 and was still 11.7% below the levels seen in February 2020, before the full impact of the coronavirus (COVID-19) pandemic.

Looking ahead, results from Wave 12 of the Business Impact of COVID-19 Survey (BICS), which covered the dates 10 to 23 August 2020, found that of businesses currently trading, 47% reported their turnover had decreased below what is normally expected for August.

The monthly growth rate for GDP is volatile. It should therefore be used with caution and alongside other measures, such as the three-month growth rate, when looking for an indicator of the longer-term trend of the economy. However, it is useful in highlighting one-off changes that can be masked by three-month growth rates.

Figure 3: All subsectors of services showed an increase in growth in July 2020, but output did not recover to the pre-COVID-19 levels of February 2020

Monthly output (March, April, May, June and July 2020) as a proportion of February 2020, February 2020 output = 100%

Notes:

1. Chart shows the March, April, May, June and July output as a proportion of February 2020 where February output equals 100%.
2. Public administration and defence output saw marginal positive growth across March, April, May, June and July 2020, so output to February 2020 is over 100%.

Download the data

.xlsx

In July 2020, the services sector grew by 6.1%, following growth of 7.7% in June. The largest positive contributors to this increase were:

• education, which grew by 21.1% as some children returned to school
• wholesale, retail and repair of motor vehicles subsector (in particular, the motor vehicles industry), which recovered to above its February 2020 level after seeing record low levels of output in April and May
• accommodation and food service activities, which grew by 140.8% as lockdown measures eased; however, the level of output was 60.1% lower than its February 2020 level

Despite an increase of 6.1% in services, the level of services output was 12.6% lower than the level in February 2020 before the main impacts of the coronavirus (COVID-19) were seen.

Looking at the rolling three-month growth, services output fell by 8.1% in July 2020, following falls of 19.9% in June, 18.5% in May and 10.5% in April. This was driven by falls in nearly every industry, most notably:

• health, which fell by 23.6% as a result of reduced activity in elective operations and fewer accident and emergency visits
• food and beverage service activities, which fell by 60.1% as a result of the closure of bars and restaurants
• education, which fell by 14.3% as a result of school closures
• accommodation, which fell by 69.2% as a result of the closure of hotels and other short-stay accommodation  

Figure 4: All sub-sectors of manufacturing showed an increase in growth in July 2020, but output had still not recovered to the pre-COVID-19 levels of February 2020

Monthly output (March, April, May, June and July 2020) as a proportion of February 2020, February 2020 output = 100%

Notes:

1. Chart shows the March, April, May, June and July output as a proportion of February 2020 where February output equals 100%.
2. The volatile manufacture of basic pharmaceuticals industry had higher output in April, May, June and July 2020 than February 2020, so the proportion is over 100%.

Download the data

.xlsx

Production grew by 5.2% in July 2020, with manufacturing growing by 6.3%. The manufacturing sector saw all 13 subsectors increasing, following large falls across March and April 2020. Despite growth in the latest month, production output was 7.0% lower than the level in February 2020, with manufacturing 8.7% lower.

Looking at the rolling three-month growth, output in the production sector fell by 3.5% in July 2020, following falls of 16.9% in June, 15.5% in May and 9.0% in April. This was driven by falls in three out of the four subsectors:

• manufacturing, which fell by 4.4% as a result of 10 out of 13 subsectors falling; the most notable was the manufacture of transport equipment, which fell by 19.1% as many factories remained closed
• electricity, gas, steam and air conditioning supply, which fell by 3.2% as a result of falling industrial demand for electricity caused by the temporary closures of businesses
• water supply, which fell by 0.7% as a result of a decline in industrial and commercial waste, resulting directly from business closures

Mining and quarrying saw growth of 2.8% in the three months to July as quarrying recovered across May, June and July 2020 after a low levels of output in March and April.

Month-on-month, output in construction grew by 17.6%, following growth of 23.6% in June and 7.6% in May and a record fall of 40.2% in April 2020. This increase was driven by new housing and in particular private new housing (18.1% weight to construction), which grew by 30.3% after large declines in March and April.

Despite growth in the construction sector, output remains 11.6% lower than the level in February 2020 before the full impact of the coronavirus (COVID-19).

On a rolling three-month basis, the construction sector shrank by 10.6% in July 2020, following a record fall of 35% in June. The largest contributors to this fall were private new housing and private housing repair and maintenance, which fell by 17.0% and 17.9%, respectively.

Coronavirus (COVID-19)

This release captures the direct effects of the coronavirus (COVID-19) pandemic and the government measures taken to reduce transmission of the virus. We have faced an increased number of challenges in producing monthly and quarterly estimates of UK gross domestic product (GDP) for June. More detailed information on the challenges and the steps taken to mitigate those can be found in Coronavirus and the effects on UK GDP.

As a result of these challenges, GDP estimates for July 2020 are subject to more uncertainty than usual.

It is important to note that while in the short run we have faced challenges to collect the information required to produce the Monthly Business Survey (MBS), response rates have improved since the first published estimate, as shown in Table 2.

Notes:

1. Table shows Monthly Business Survey (MBS) turnover response rates.
2. Response rate for all months, both questionnaire and turnover, can be found in Index of Production, Index of Services, and Construction.

Construction response rates for March are lower than usual as the MBS was collected by paper before moving online in April. For more information, please refer to the Construction release.

Communicating gross domestic product

Recent analysis explains our latest position on how we are looking to communicate GDP, including how we will continue to acknowledge that “technical” recessions are comprised of at least two consecutive quarters of contracting GDP.

While it is still true that these early estimates are prone to revision, we prefer to focus on the magnitude of the contraction that has taken place following the coronavirus pandemic. It is clear that the contraction in GDP in Quarter 2 (Apr to June) was in the largest recession on record. Our latest estimates show that the UK economy was 11.7% smaller in July than it was in February, the effects of which have been most pronounced in those industries that are most exposed to public health restrictions and the effects of social distancing.

Blue Book 2020

Each year, we produce an annual update to the UK National Accounts in the Blue Book and Pink Book and the associated releases. As already announced, the Blue Book and Pink Book 2020 consistent datasets will be published on 30 September 2020 as part of the quarterly national accounts.

Details have already been provided on the scope in the article Latest developments and changes to be implemented in Blue Book and Pink Book 2020. Indicative impacts on headline GDP components for the years 1997 to 2018 were published on 20 July 2020 in the article Impact of Blue Book 2020 changes on current price and volume estimates of gross domestic product.

The next monthly publication on 9 October 2020 will incorporate revisions consistent with Blue Book 2020, where the reference year and last base year for all chained volume measure series will be updated to 2018.  

Quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in the Gross domestic product (GDP) QMI.