GDP monthly estimate, UK: March 2020

This release captures the first 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. However, a more detailed analysis of the impact on the output of businesses has also been published today (13 May 2020).

Statistician’s comment

Commenting on today’s GDP figures, Jonathan Athow, Deputy National Statistician for Economic Statistics, said:

“With the arrival of the pandemic nearly every aspect of the economy was hit in March, dragging growth to a record monthly fall.

“Services and construction saw record declines on the month with education, car sales and restaurants all falling substantially.

“Although very few industries saw growth, there were some that did including IT support and the manufacture of pharmaceuticals, soaps and cleaning products.

“The pandemic also hit trade globally, with UK imports and exports falling over the last couple of months, including a notable drop in imports from China.”

Figure 2: Breakdown of GDP and its sub-sectors, rolling three-month growth rates and contributions to growth, January to March 2020

All the headline sectors provided a negative contribution to gross domestic product (GDP) growth in the three months to March 2020. The services sector fell by 1.9%, production by 2.1% and construction by 2.6%. The impacts of the coronavirus (COVID-19) were seen right across the economy, with nearly all sub-sectors falling in the three months to March.

Rolling three-month growth fell by 2.0% in March 2020, following no output growth in February 2020. All the main sectors in the economy also saw a fall in the most recent period.

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 gross domestic product (GDP), which include information on the expenditure and income approaches to measuring GDP.

Monthly gross domestic product (GDP) fell by 5.8% in March 2020, the biggest monthly fall since the series began in 1997. Services and construction also saw record falls in the most recent month.

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 1.9% in March 2020, following growth of 0.2% in the three months to February 2020. This was driven by falls in nearly every industry, most notably:

• education, which fell by 4.0% as a result of school closures at the end of March
• wholesale and retail trade and repair of motor vehicles and motorcycles, which fell by 10.7%, predominantly driven by a reduction in new car registrations
• food and beverage service activities, which fell by 7.3% as a result of the closure of bars and restaurants towards the end of March
• accommodation, which fell by 14.6% as a result of the closure of hotels and campsites in March
• travel agents, which fell by 23.6% as a result of reduced demand caused by the introduction of travel restrictions in March

Despite widespread falls, some industries saw growth, the largest of which was computer programming, consultancy and related activities, which grew by 1.4%.

In March 2020, the services sector fell by 6.2%, the largest monthly fall on record. The largest driver to this fall was wholesale, retail and motor trades followed by accommodation and food services, and education. The only positive contribution to growth came from public administration and defence, which grew marginally compared with the previous month.

Rolling three-month output in the production sector fell by 2.1% in March 2020, with manufacturing falling by 1.7%.

There were widespread falls across manufacturing industries with 9 out of 13 sub-sectors falling. The most notable was the manufacture of transport equipment, which fell by 9.9%. This was partially offset by an increase in the manufacture of basic pharmaceuticals, which grew by 9.2%.

Elsewhere, energy production along with mining and quarrying fell, while water supply increased. The fall in mining and quarrying was largely as a result of widespread maintenance shutdowns within oil and gas extraction.

Production fell by 4.2% in March 2020, with manufacturing falling by 4.6%. The largest cause of this decrease was manufacture of transport equipment, which fell by 20.5% following COVID-19-led shutdowns on car plants across the UK.

Rolling three-month growth in the construction sector was negative 2.6% in March 2020. This was caused by private commercial work which fell 5.3%, as well as declines in private housing new work and private housing repair and maintenance (negative 4.2% and negative 7.5%, respectively).

Month-on-month, output in construction fell by a record 5.9% in March 2020, following a fall of 2.1% in the weather-impacted February 2020. This fall was driven by declines in all types of work, which, again, is the first time this has happened since monthly records began in 2010. There were record monthly declines in both repair and maintenance (-5.1%) and new work (-6.2%)

The expenditure approach to measuring gross domestic product (GDP) fell by 2.0% in Quarter 1 (Jan to Mar) 2020. Household consumption fell by 1.7%, the largest contraction since Quarter 4 (Oct to Dec) 2008, alongside declines in gross fixed capital formation, government consumption and trade volumes.

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

The income approach to measuring gross domestic product (GDP) has a relatively low data content at this early stage compared with the output and expenditure approaches, with many of the income components based on forecasts. As such, care should be taken when interpreting these. For more information please see the bulletin for the first quarterly estimate of GDP.

Revisions

This release incorporates revisions to estimates for January and February 2020.

Coronavirus (COVID-19)

In response to the developing coronavirus (COVID-19) pandemic, we are working to ensure that we continue to publish economic statistics. For more information, please see COVID-19 and the production of statistics. In line with the current government guidelines, we are encouraging Office for National Statistics (ONS) staff to work from home and to avoid unnecessary travel and social contact. We have an established infrastructure to help mitigate these changes to ensure we continue to produce economic statistics. We will continue to review our mitigation as events unfold.

This release captures the first direct effects of the coronavirus pandemic and the government measures taken to reduce transmission of the virus. Because of the implementation of these government measures, which include restrictions in movement, we faced an increased number of challenges in producing monthly and quarterly estimates of UK gross domestic product (GDP) for Quarter 1 2020. More detailed information on the challenges and the steps taken to mitigate those can be found in Coronavirus and the effects on UK GDP. Further information on industry response rates and challenges can be found in the impact on the output of businesses.

As a result of these challenges, GDP estimates for Quarter 1 (Jan to Mar) 2020 are subject to more uncertainty than usual.

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