GDP monthly estimate, UK: November 2020

Following six consecutive monthly increases, including an upwardly revised 0.6% increase in October, real gross domestic product (GDP) fell by 2.6% in November 2020. Restrictions were in place to varying degrees across all four nations of the UK during November.

Restriction announcements for each nation are available:

• England
• Scotland
• Wales
• Northern Ireland

November GDP fell back to 8.5% below the levels seen in February 2020 compared with 6.1% below in October 2020. GDP fell by 8.9% in the 12 months to November 2020, compared with an annual decline of 6.8% to October.

The services sector acted as the main drag on growth in November, falling by 3.4% as restrictions on activity were reintroduced in some parts of the UK in response to the coronavirus (COVID-19) pandemic. The services sector is now 9.9% below the level of February 2020.

The production sector also fell marginally by 0.1% in November 2020, remaining 4.7% below the February 2020 level. Elsewhere the construction sector saw positive growth of 1.9% in November 2020, recovering to 0.6% above the February 2020 level.

There were falls in output in all 14 services sub-sectors between October and November 2020. The largest contributor to this fall was accommodation and food service activities, followed by wholesale and retail trade, other service activities and arts, entertainment and recreation, because of the reintroduction of restrictions in some parts of the UK. These four sectors accounted for nearly 80% of the fall in services.

This release features revisions to the monthly data back to January 2019, consistent with the Quarterly National Accounts published on 22 December 2020. While the revisions are small at headline level across 2019 and 2020, it is worth noting that there has been a comparatively larger revision to the construction sector in 2020. Construction output in October is now estimated to be 1.3% below its February 2020 level, compared with the previously published 6.4% below. In addition, October 2020 is open to revision to incorporate latest data. More detail can be found in Revisions in Section 5.

Looking ahead, results from Wave 21 of the Business Impact of Coronavirus (COVID-19) Survey (BICS), which covered the dates 14 to 27 December 2020, found that of businesses currently trading, 42% reported their turnover had decreased below what is normally expected for December, compared with 45% reporting decreases at the end of November in Wave 19. The accommodation and food service activities industry and the arts, entertainment and recreation industry had the highest percentages of businesses experiencing a decrease in turnover compared with normal expectations for this time of year, both at 76%. This was followed by the other service activities industry (which includes hairdressing and other beauty treatment activities), at 69%.

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.

GDP grew by 4.1% in the three months to November 2020, down from 10.5% in the three months to October. This reflects the easing of lockdown measures in earlier months and some recovery from the steep contraction in April 2020.

Figure 4 shows the performance of total services output, a composite industrial indicator based on output in ‘consumer-facing’ services, and output in all other industries in the services sector. Consumer-facing services saw the greatest loss in output after the introduction of restrictions on activity introduced in March 2020. As lockdown restrictions were eased, consumer-facing services initially recovered more than all the other service sector industries because of consumer demand for pubs and restaurants (boosted by the Eat Out to Help Out scheme), personal services, and retail. However, in November 2020, consumer-facing services weakened as restrictions were reintroduced in some parts of the UK.

Trade of motor vehicles and retail trade, as well as food and beverage activities, were the services industries that contributed most to the falls in both April and November 2020 as restrictions on activity in response to the coronavirus pandemic were introduced in both months. While not predominantly consumer facing, both warehousing and support activities for transportation and postal and courier activities contributed positively to growth in November 2020, growing by 2.5% and 2.7% respectively. This strength was driven by increased online retail activity during this period, due to Black Friday and the build-up to Christmas.

Services output grew by 3.7% in the three months to November 2020. This was driven by increases in nearly every industry, most notably education and health which combined contributed 1.48 percentage points. However it is important to note that these data are based on early outturns and forecasts, and can be subject to revisions.

Production fell marginally by 0.1% in November 2020 as three out of the four sub-sectors fell. Mining and quarrying fell by 3.4% due to reduced demand in the global market. This was the fifth consecutive monthly fall, driven by a fall of 4.5% from oil and gas extraction. The decline in oil and gas extraction since June 2020 is because of a slump in oil prices amid tightened restrictions impacting on demand.

Electricity, gas, steam and air conditioning supply and water supply also fell by 2.3% and 0.4% respectively.

Elsewhere in production, the manufacturing sector grew by 0.7%, with 8 out of its 13 sub-sectors increasing. The largest contribution came from the manufacture of motor vehicles industry, which grew 5.7% in November 2020. This is a result of growth from large businesses to meet increased demand, and this industry is now 1.3% above its February 2020 level.

Output in the production sector grew by 2.9% in the three months to November 2020. This was driven by increases in three out of four sub-sectors.

Manufacturing grew by 4.7% as a result of 12 out of the 13 sub-sectors increasing in the three months to November 2020. Most notably, the manufacture of transport equipment grew by 18.9%, however, it is still 15.3% below its pre-pandemic level. Despite the recovery in manufacture of motor vehicles industry (as noted in the previous paragraph), the manufacture of air and spacecraft in this sub-sector has struggled to regain output and remains 35.5% below the February level.

Water supply, sewerage and waste management and remediation activities grew by 1.2% in the three months to November 2020 as a result of a general increase in commercial, industrial and construction waste activity.

The electricity, gas, steam and air conditioning supply sub-sector increased by 0.2% in the three months to November 2020 as a result of increased demand as more factories and premises reopened.

Mining and quarrying fell by 6.9% in the three months to November 2020 as a result of declines in August because of planned maintenance shutdowns as well as a fall in oil prices, which has led to a recent decline for oil and gas extraction output.

Output in construction grew by 1.9% in November 2020, the seventh consecutive month of growth, suggesting this sub-sector was largely unaffected by the reintroduction of new restrictions. Health and safety measures such as social distancing, where businesses are working on premises and sites, continue to reduce capacity and level of work which is still down on the previous year’s level. However, unlike the government guidelines on restrictions in movement during the first lockdown in April and May, the construction industry remained broadly open across Great Britain in November 2020.

This monthly growth is driven by increases in both infrastructure (9.6%) and private new housing (4.7%) meaning both sectors are above their pre-pandemic February 2020 levels at 9.1% and 4.2% respectively.

Over recent months, repair and maintenance has also performed more strongly than new work as all components recovered to their pre-pandemic February 2020 level.

The construction sector grew by 12.4% in the three months to November 2020. The main contributor to this increase was new housing, in particular private new housing, which recovered after record low output in April 2020.

Revisions

This release gives data for November 2020 for the first time and incorporates revisions to monthly data from January 2019 to September 2020 as published in the Quarterly National Accounts release on 22 December 2020. October 2020 is also open to revision, taking on updated survey data. Table 1 shows the revisions to monthly GDP and sub-sectors for 2020.

Further details about the main changes affecting this release are provided in the latest Quarterly national accounts release, along with analysis of the revisions to each quarter from 2019 onwards.

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). 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 November 2020 are subject to more uncertainty than usual.

Early in the pandemic we face some challenges in timely responses to the monthly business survey as businesses adapted to new conditions. In recent months response rates have improved and are shown for the latest months 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.

End of EU Exit Transition period

As the UK enters into a new Trade and Cooperation Agreement with the EU, the UK statistical system will continue to produce and publish our wide range of economic and social statistics and analysis. We are committed to continued alignment with the highest international statistical standards, enabling comparability both over time and internationally, and ensuring the general public, statistical users and decision makers have the data they need to be informed.

Additionally, the Withdrawal Agreement outlines a need for UK gross national income (a fundamental component of the national accounts, which includes GDP) statistics to remain in line with those of other EU countries until EU budget contributions are finalised for the years in which we were a member, and making budget contributions during the transition period. To ensure this comparability during this period, the national accounts will continue to be produced according to European System of Accounts (ESA) 2010 definitions and standards until at least 2024.

As the shape of the UK’s future statistical relationship with the EU becomes clearer over the coming period, we are making preparations to assume responsibilities that as part of our membership of the EU, and during the transition period, were delegated to the statistical office of the EU, Eurostat. This includes responsibilities relating to international comparability of economic statistics, deciding what international statistical guidance to apply in the UK context and to provide further scrutiny of our statistics and sector classification decisions.

In applying international statistical standards and best practice to UK economic statistics, we will draw on the technical advice of experts in the UK and internationally, and our work will be underpinned by the UK’s well-established and robust framework for independent official statistics, set out in the Statistics and Registration Service Act 2007. Further information on our proposals will be made available in early this year.

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 COVID-19 pandemic. It is clear that the contraction in GDP in Quarter 2 (Apr to June) 2020 was in the largest recession on record. Our latest estimates show that the UK economy is now 8.5% 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.

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