GDP monthly estimate, UK: June 2020

Figure 1: GDP saw its second consecutive quarterly decline in Quarter 2 2020

UK GDP growth, Quarter 1 (Jan to Mar) 2005 until Quarter 2 (Apr to June) 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 Sept), Q4 refers to Quarter 4 (Oct to Dec).

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This release captures the direct effects of the coronavirus (COVID-19) pandemic and the government measures taken to reduce transmission of the virus. The most significant was the introduction of restrictions in movement across the UK, which began on 23 March 2020.

This bulletin provides a broad overview of the economy and the impact of the coronavirus. A more detailed analysis of Coronavirus and the impact on output in the UK economy has also been published today (12 August 2020), along with a comprehensive account of GDP first quarterly estimates for April to June 2020.

Statistician's comment

Commenting on today’s GDP and productivity figures for June and the second quarter, ONS Deputy National Statistical for Economic Statistics Jonathan Athow said:

“The recession brought on by the coronavirus pandemic has led to the biggest fall in quarterly GDP on record.

“The economy began to bounce back in June with shops reopening, factories beginning to ramp up production and housebuilding continuing to recover. Despite this, GDP in June still remains a sixth below its level in February, before the virus struck.

“Overall, productivity saw its largest ever fall in the second quarter. Hospitality was worst hit, with productivity in that industry falling by three quarters in recent months.”

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 comprising 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 in response to the coronavirus (COVID-19) pandemic. It is clear that the UK is in the largest recession on record. Our latest estimates show that the UK economy is now 17.2% smaller 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.

Looking at the monthly profile, Figure 2 shows the monthly GDP index level to June 2020. Monthly GDP grew by 8.7% in June 2020 as lockdown measures eased, following upwardly revised growth of 2.4% in May and a record fall of 20.0% in April 2020.

In the two months since its April 2020 low, the UK economy has grown by a total of 11.3%. However, it still remains 17.2% below levels seen in February 2020, before the full impact of the coronavirus. For more detail on the monthly data, please refer to Section 3.

Gross domestic product (GDP) fell by 20.4% in the three months to June 2020, following a fall of 18.7% in the three months to May, 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.

Figure 4: Breakdown of GDP and its sub-sectors, rolling three-month growth rates and contributions to growth, April to June 2020

Notes:

1. Rolling three-month estimates are calculated by comparing GDP in a three-month period with GDP in the previous three-month period. For example, GDP April to June compared with the previous January to March.
2. Growth for aggregate sub-sectors is a weighted average of components.
3. Components contributions may not sum to total due to rounding. Please use additional caution when aggregating individual contributions for April to June 2020, as the larger-than-usual growth rates mean that, when summed, the rounded contributions may not accurately represent the higher-level contribution being calculated.

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All the headline sectors provided a negative contribution to GDP growth in the three months to June 2020. The services sector fell by 19.9%, production by 16.9% and construction by 35.0%. The impacts of the coronavirus (COVID-19) continued to be seen right across the economy, with nearly all sub-sectors falling in the three months to June.  

Monthly gross domestic product (GDP) grew by 8.7% in June 2020, following growth of 2.4% in May 2020. Despite this, the level of output did not fully recover from the record falls seen across March and April 2020, and has reduced by 17.2% compared with February 2020, before the full impact of the coronavirus (COVID-19) pandemic.

Looking ahead, results from Wave 10 of the Business Impact of Coronavirus (COVID-19) Survey (BICS), which covered the dates 13 to 26 July 2020, found that of businesses currently trading, 45% reported their turnover exceeded their operating costs, compared with 16% who reported their operating costs exceeded their turnover. However, of those businesses currently trading, over half (54%) reported a decrease in turnover during this period compared with what is normally expected for July.

This release features revisions to the monthly data back to April and May 2020 in line with the UK National Accounts revisions policy. There has been an upward revision to both April and May. Monthly GDP for April is now estimated to have fallen by 20.0%, an upward revision of 0.3 percentage points. Monthly GDP for May is now estimated to have increased by 2.4%, an upward revision of 0.6 percentage points. These revisions are largely the result of reprofiling of the monthly path to fit updated quarterly information on education output in line with the expenditure measure of GDP.

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.

Rolling three-month services growth fell by 19.9% in June 2020, following falls of 18.5% in May 2020 and 10.5% in April 2020. This was driven by falls in nearly every industry, most notably:

• education, which fell by 34.4% as a result of school closures
• health, which fell by 36.1% as a result of reduced activity in elective operations and fewer accident and emergency visits
• food and beverage service activities, which fell by 84.7% as a result of the closure of bars and restaurants
• wholesale and retail trade and repair of motor vehicles and motorcycles, which fell by 63.0%, predominantly driven by a reduction in new car registrations

Looking at monthly services, Figure 6 shows the monthly level of output in the services sub-sectors as a proportion of February 2020 levels.

Figure 6: All sub-sectors of services showed an increase in growth in June 2020 but output did not recover to February 2020 levels

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

Notes:

1. Chart shows the March, April, May and June 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 and June 2020 so output to February 2020 is over 100%

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In June 2020, the services sector grew by 7.7%, following growth of 1.5% in May and a fall of 18.5% in April. The largest positive contributor to this increase was the wholesale, retail and repair of motor vehicles sub-sector, in particular the motor vehicles industry, which recovered to around three-quarters of its February 2020 level after seeing record low levels of output in April and May.

Despite an increase of 7.7% in services, the level of services output is 17.6% lower than the level in February 2020 before the full impact of the coronavirus.

Rolling three-month output in the production sector fell by 16.9% in June 2020, following falls of 15.5% in May and 9.0% in April. This was driven by falls in all four sub-sectors:

• manufacturing, which fell by 20.2% as a result of widespread falls with 12 out of 13 sub-sectors falling; the most notable was the manufacture of transport equipment, which fell by 49.1% as many factories remained closed
• electricity, gas, steam and air conditioning supply, which fell by 8.8% as a result of falling industrial demand for electricity caused by the temporary closures of businesses
• water supply, which fell by 5.6% as a result of a decline in industrial and commercial waste, resulting directly from business closures
• mining and quarrying, which fell by 7.3% as a result of some coronavirus (COVID-19) related shutdowns, along with the reduced demand for oil and gas

Looking at monthly production, Figure 8 shows the monthly level of output in the manufacturing sub-sectors as a proportion of February 2020 levels.

Figure 8: Most sub-sectors of manufacturing showed an increase in growth in June 2020 but output did not recover to February 2020 levels

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

Notes:

1. Chart shows the March, April, May and June output as a proportion of February 2020 where February output equals 100%
2. Manufacture of Basic Pharmaceuticals had higher output in March, April, May and June 2020 than February 2020, so the proportion is over 100%.

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Production grew by 9.3% in June 2020, with manufacturing growing by 11.0%. The manufacturing sector saw 11 out of 13 sub-sectors increasing after large falls across March and April 2020. Despite growth in the latest month, production output is 11.6% lower than the level in February 2020, with manufacturing 14.2% lower.

Rolling three-month growth in the construction sector was negative 35.0% in June 2020. This is a record fall in the three-month on three-month growth and was caused by record declines in all sectors apart from infrastructure. The largest contributors to this fall were private new housing and private commercial, which fell by 51.2% and 33.4% respectively.

Looking at the monthly data, Figure 7 shows the monthly index for construction, total repair and maintenance, and total new work from June 2019 to June 2020.

Month-on-month, output in construction grew by 23.5% following growth of 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 42.3% after large declines in March and April.

Despite growth in the construction sector, output remains 24.8% lower than the level in February 2020 before the full impact of the coronavirus.

The expenditure approach to measuring gross domestic product (GDP) fell by 20.4% in Quarter 2 (Apr to June) 2020. There have been record contractions in all types of expenditure in Quarter 2, most notably private consumption, which accounted for more than 70% of the fall in GDP in the second quarter.

For more information please see the bulletin for the first GDP quarterly estimate.

Nominal gross domestic product (GDP) fell by a record 15.4% in Quarter 2 (Apr to June) 2020, following a fall of 1.2% in the previous quarter. Taxes less subsidies fell by 83.7% in Quarter 2 2020, reflecting a decline in tax revenue and an increase in subsidies. The increase in subsidies primarily relates to the Coronavirus Job Retention Scheme (CJRS) and Self Employment Income Support Scheme (SEISS) and incorporate estimates from the updated OBR coronavirus reference scenario published on 14 July 2020.

It is worth noting, however, that there is more uncertainty around this estimate than other components of the income measure of GDP. For more information please see the bulletin for the first GDP quarterly estimate.

Revisions

This release incorporates revisions to estimates for April and May 2020.

Coronavirus (COVID-19)

This release captures the direct effects of the coronavirus 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 June 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 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 survey was collected by paper before moving online in April. For more information, please refer to the Construction release.

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