GDP monthly estimate, UK: May 2020

Figure 1: GDP fell by 19.1% in the three months to May, as government restrictions on movement dramatically reduced economic activity

UK GDP growth, Quarter 1 (Jan to Mar) 2005 until March to May 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 GDP in a three-month period with GDP in the previous three-month period. For example, GDP March to May compared with the previous December to February.

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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. However, a more detailed analysis of the impact on the output of businesses has also been published today (14 July 2020).

Statistician's comment

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

"Manufacturing and house building showed signs of recovery as some businesses saw staff return to work. Despite this, the economy was still a quarter smaller in May than in February, before the full effects of the pandemic struck.

In the important services sector, we saw some pickup in retail, which saw record online sales. However, with lockdown restrictions remaining in place, many other services remained in the doldrums, with a number of areas seeing further declines."

Gross domestic product (GDP) fell by 19.1% in the three months to May 2020, following falls of 10.8% in April and 2.2% in March. 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 GDP, which include information on the expenditure and income approaches to measuring GDP.

Figure 3: Breakdown of GDP and its sub-sectors, rolling three-month growth rates and contributions to growth, March to May 2020

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 March to May compared with the previous December to February.

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 May 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 May 2020. The services sector fell by 18.9%, production by 15.5% and construction by 29.8%. 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 May.

Monthly gross domestic product (GDP) grew by 1.8% in May 2020. Despite this, the level of output did not recover from the record falls seen in March and April 2020 and has reduced by 24.5% compared with February 2020, before the full impact of the coronavirus.

This release features revisions to the monthly data back to January 2019 in line with the UK National Accounts revisions policy. While the revisions are small at the headline level in 2019, a downward revision to March 2020 has resulted in a downwardly revised Quarter 1 (Jan to Mar) 2020, as published on 30 June 2020 in the Quarterly National Accounts. Monthly GDP for March 2020 is now estimated to have fallen by 6.9%, a downward revision of 1.1 percentage points from the previous estimate. This revision is driven by the health and education industries, where the revision to health output reflects updated information from the NHS, while the revision to education output is because of improved alignment with government expenditure data.

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 18.9% in May 2020, following a 10.7% fall in the three months to April 2020. This was driven by falls in nearly every industry, most notably:

• education, which fell by 37.8% as a result of school closures during March, April and May

• health, which fell 31.4% as a result of reduced activity in elective operations and fewer accident and emergency visits

• food and beverage service activities, which fell by 69.3% as a result of the closure of bars and restaurants throughout March, April and May

• wholesale and retail trade and repair of motor vehicles and motorcycles, which fell by 71%, predominantly driven by a reduction in new car registrations

Looking at monthly services, Figure 5 shows the month on previous month contributions to services for March, April and May 2020.

In May 2020, the services sector grew by 0.9%, following a fall of 18.9% in April 2020. The largest positive contributor to this increase was the wholesale, retail and repair of motor vehicles sub-sector, in particular the retail industry which grew 12.0% as a result of strong growth in non-food stores and a record proportion of online sales. Despite an increase of 0.9% in services, the level of services output is 24.4% lower than the pre COVID-19 level in February 2020.

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

• manufacturing, which fell 18.0% 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 45.7% as many factories remained closed

• electricity, gas, steam and air conditioning supply, which fell 9.8% as a result of falling industrial demand for electricity caused by the temporary closures of businesses throughout March, April and May

• mining and quarrying, which fell 10.7% as a result of some COVID-19 related shutdowns, along with the reduced demand for oil and gas

• water supply, which fell 4.6% as a result of a decline in industrial commercial waste, resulting directly from factory closures during March, April and May.

Looking at monthly production and manufacturing, Figure 6 shows the month on previous month contributions to manufacturing for March, April and May 2020.

Production grew by 6.0% in May 2020, with manufacturing growing by 8.4%. 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 19.1% lower than the pre COVID-19 level in February 2020, with manufacturing 22.3% lower.

Rolling three-month growth in the construction sector was negative 29.8% in May 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 42.5% and 29.5% respectively.

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

Month-on-month, output in construction grew by 8.2% after a record fall of 40.2% in April 2020. This increase was driven by new housing, in particular private housing (14.2% weight to construction), which grew 21.4% after large declines in March and April. Total repair and maintenance saw slower growth at 2.7% as more repair and maintenance activity may have been undertaken by individuals on their own homes during lockdown. This is supported by evidence that the volume sales in hardware, paints and glass stores returned to February 2020 levels. Despite growth in the construction sector, output remains 38.8% lower than the pre COVID-19 level in February 2020.

Revisions

This release gives data for May 2020 for the first time and incorporates revisions to monthly data from January 2019 to April 2020.

Usual practice would have seen the introduction of Value Added Tax (VAT) information for Quarter 4 (Oct to Dec) 2019 for the first time in the output approach to GDP. However, some quality concerns were identified with the VAT information for services and production industries. To allow further time to quality assure the data, we have delayed its introduction until the Blue Book-consistent Quarterly National Accounts published on 30 September 2020, with a monthly consistent dataset published on 9 October 2020. VAT information for construction in Quarter 4 2019 has been included in this release as usual.

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.

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 May. 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 May 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 below.

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.