uk recovery tracker · the global pmi output index registered its fifth consecutive month of...

UK Recovery Tracker – Introduction

1

C O M M E R C I A L B A N K I N G

December 2020

UK Recovery Tracker

By the side of business

UK sectors saw stronger growth than their global sector equivalents in November

6/14

2


In this monthly report, we provide insights into the shape and pace of the UK and global economic recovery.

A key feature of this month’s report is the improving resilience of the global recovery when measured against government stringency measures. Led by renewed national lockdowns in Europe, the average worldwide stringency level tightened further in November, to levels last seen in June. However, the Global PMI output index registered its fifth consecutive month of expansion, primarily reflecting stronger growth momentum in the US, China and Asia-Pacific region. There is an increasingly stark contrast between weakness in Europe and stronger performance elsewhere.

Another continuing theme this month is the outperformance of the manufacturing sector compared to services, particularly in Europe, reflecting both the lesser extent of recent mandatory restrictions compared to the spring, and businesses adapting their operations during the pandemic.

IntroductionAt the global broad sector level, higher levels of output were signalled in six of our seven categories. Healthcare experienced by far the strongest growth in activity in November, while Consumer Services activity dropped at a sharper pace – now falling for 10 consecutive months. More positively, news of an effective Covid-19 vaccine significantly bolstered business expectations for the year ahead, particularly in those sectors most affected by lockdown and social distancing measures.

After robust outperformance in Q3 compared to the World index, the UK’s recovery momentum fell further behind the global benchmark in Q4. The UK composite PMI fell for the third consecutive month in November, slipping to 49.0 and below the crucial 50.0 level for the first time since June.

The deterioration was largely concentrated in the services sector, with the UK Services PMI falling from 51.4 to 47.6. In contrast, the UK manufacturing PMI posted a solid gain to 55.6, the highest level since December 2017 and well above its March low (32.6).

The UK sector detail also underlined a more resilient backdrop during this national lockdown. Of the 14 'fine sectors' monitored by the Recovery Tracker, 10 registered output growth in November, with 5 reporting a pick up in activity growth.

While the lockdown in England has ended, the return to a system of regional restrictions will continue to constrain activity in the coming months. With the level of UK GDP likely to close the year more than 10% below where it ended 2019, it highlights that the domestic recovery still has far to go. The wide divergence of performance across UK industry sectors suggests additional challenges compared to a more typical recession.

The recent rollout of the Pfizer/BioNTech vaccine offers optimism for a stronger UK recovery in 2021. However, more immediately, the move to a new trading relationship with the EU from the start of next year will inevitably present its own challenges for many businesses.

The next few months represent a crucial time for the UK recovery.

Survey responses from carefully selected companies are collected by IHS Markit to indicate the direction of change compared to the previous month for a range of variables, such as output, new orders, employment and prices.

‘Diffusion’ indices are then calculated by taking the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses.

The individual indices vary between 0 and 100, with values above 50.0 signalling expansion and below 50.0 indicating contraction. The distance from the 50.0 no-change mark signals the implied rate of change in the variable – the further from 50.0 the faster the rate of change indicated.

Jan = Growth

Feb = Growth, faster rate

Mar = Growth, same rate

Apr = Growth, slower rate

May = No change

Jan

60

54

50

44

40

56

58

52

48

42

46

Index interpretation50 = no change

Feb Mar Apr May Jun Jul Aug Sep Oct

Jun = Decline

Jul = Decline, faster rate

Aug = Decline, same rate

Sep = Decline, slower rate

Oct = No change

UK sectors recorded output growth in November

10 out of 14 6 out of 14recorded stronger growth than their global sector equivalents

Only

3

UK Recovery Tracker – Global context

Global context

1. Global output momentum, November vs. October

Global recovery continues, helped by the fastest growth in China for over 10 years The world economy recorded its fifth consecutive month of expansion in November, according to the IHS Markit Global Purchasing Managers’ Index (PMI). The index registered 53.1, down slightly for the first month during the recovery phase but still comfortably above the 50.0 mark that separates growth from contraction. Manufacturing production (55.2) expanded at the fastest

pace since January 2018 and outperformed service sector activity (52.2) by a wide margin.

The survey also offered signs of a more sustainable recovery path, with rising volumes of new business translating into jobs growth and higher levels of business optimism during November. At 51.7, the employment index pointed to the strongest rise in private sector hiring since April 2019.

Meanwhile, positive news about effective vaccines boosted

business expectations for 2021. The business expectations index surged to 67.2 in November, its highest reading for six-and-a-half years, led by improvements in the US and Europe.

Looking at national economic activity in November, there was a clear divergence between Europe and the rest of the world. Stronger recoveries in the United States (58.6) and China (57.5) were the main drivers of global economic growth, with the latter recording its largest

increase in private sector output since March 2010. Renewed national lockdown measures saw the United Kingdom (49.0), France (40.6), Italy (42.7), Spain (41.7) and Ireland (47.7) all record declines in private sector output in November.

Tighter stringency in Europe, but impact is more contained than first lockdowns Chart 2 shows the change in national government stringency measures (calculated by IHS Markit) and the movement

in the PMI Output Index since October. The ‘Government Response Index’ score ranges from 0 to 100 and captures the overall severity of restrictions across seven categories, ranging from school closures through to bans on mass gatherings and limiting the movement of people.

Eight of the thirteen countries monitored by the Recovery Tracker experienced stricter restrictions in November than October, while only India, Brazil

and Australia saw lower levels of stringency.

New lockdown measures in Western Europe, focussed on limiting travel, leisure and hospitality, saw manufacturing vastly outperform the services economy. The same pattern was also apparent in the US.

The composition of growth in China and Australia bucked the trend, as service sector activity rose at a slightly stronger rate than manufacturing. This provides hope that a similar

2. Stringency vs output PMI changes in November

Composite PMI Output Index (November 2020), change vs previous month

3. Government response index vs global output PMI

Mar May Jul Sep Nov

30

40

50

Jan-20

20

70

60

50

40

30

20

80

60

Average Government Response index (inverted)

Global Composite index, 50 = no change

Global PMI

Global Covid-19 response

Jan-21

Italy

Australia

China

Ireland

UK

Spain

Germany

USA

Russia

Brazil

India

France

Japan

-10 0 5

50

60

-5OUTPUT FALLING,

SLOWER RATE OF DECLINEOutput index vs. previous period

Output index, 50 = no change

OUTPUT FALLING, FASTER RATE OF DECLINE

OUTPUT RISING,FASTER RATE OF GROWTH

OUTPUT RISING, SLOWER RATE OF GROWTH

40

World

Italy

AustraliaChina

Ireland

United Kingdom

Russia

SpainGermany

United States

Brazil

India

France

Japan

20 103040

-5

-10

-100

5

LOOSER RESTRICTIONS

IHS Markit Government Response Index, change vs previous month

STRICTER RESTRICTIONS

4


catch-up for service providers can be achieved in other parts of the world as virus cases are brought under control.

In the meantime, there are signs that global growth has become more resilient to government stringency measures. Average worldwide stringency tightened again during November and is back to levels in June. However, while new lockdown measures derailed the European recovery, the US, China and Asia-Pacific region kept the global economy

on a solid growth path. Chart 3 shows the average worldwide stringency level, mapped against the Global PMI output index.

The widening divergence between worldwide stringency and global growth also reflects a change in the extent and precision of restrictions, helping to reduce collateral damage to non-customer facing areas. Furthermore, all types of businesses around the world have better adapted

4. Global sector output momentum in November vs October (Broad)

5. Global sector output momentum in November vs October (Fine)

their operations to build more resilience during the pandemic.

Six out of seven broad sectors showed output growth Higher levels of output were seen in six out of seven broad sectors of the global economy in November. However, Consumer Services activity (45.0) dropped for the tenth consecutive month and at a faster pace than in October.

With many nations experiencing a resurgence in Covid-19 cases, especially the US and Europe,

it was unsurprising to see Healthcare return to the top of the sectoral growth rankings. Other fast growing parts of the global economy were Consumer Goods (55.4) and Financials (54.7). Production of Consumer Goods increased at the fastest pace since February 2015.

Basic Materials (53.6), Technology (53.0) and Industrials (52.5) also experienced higher levels of business activity in November. Technology was a bright spot in terms of

momentum, with the rate of output growth in this category accelerating to a two-year high. Strong growth in automotive output and industrial goods Looking at the most granular level of sector detail (chart 5), higher levels of output in November were achieved in twelve out of fourteen sectors monitored by the Recovery Tracker. This was unchanged since October and again reflected expansions in all categories except for Tourism

& Recreation (44.0) and Transportation (48.7). Overall, this data illustrates that the most vigorous rebound in output levels have been enjoyed by parts of the global economy that have benefited from the switch in consumer spending from services to durable goods. Moreover, the consumer-led manufacturing recovery continues to drive up demand across the supply chain and broaden out into areas such as capital goods, technology equipment and support services.

Group (Broad) Sector (Fine) Sub-sector (Fine)Basic Materials - Chemicals

- Resources - Forestry & Paper Products - Metals & Mining

Consumer Goods - Automobiles & Auto Parts - Beverages & Food - Household Products

- Food - Beverages

Consumer Services - Media - Tourism & Recreation

Financials - Banks - Insurance - Other Financials - Real Estate

Healthcare - Healthcare Services - Pharmaceuticals & Biotechnology

Industrials - Industrial Goods - Industrial Services - Transportation

- Machinery & Equipment - Construction - Commercial & Professional Services - General Industrials

Technology - Technology Equipment - Software & Services

Composition of "Broad" and "Fine" sectors:

Greyed out Sectors and Sub-sectors are not available for the UK. Those in Green are included in this report.

Consumer Services

Technology

Consumer Goods

IndustrialsBasic Materials

Healthcare

Financials

5-10 0-5 1540

45

50

65

55

OUTPUT FALLING,SLOWER RATE OF DECLINEOutput index vs. previous periodOUTPUT FALLING, FASTER RATE OF DECLINE




10

60

Manufacturing

Services

Combined

ChemicalsTechnology Equipment

Household Products

Real Estate

Metals & Mining

Automobiles & Auto Parts

Healthcare

Banks

Tourism & Recreation

Software Services

Industrial Goods

Industrial ServicesBeverages & Food

Transportation

0 10-5 5 1540

50

65

55

45

OUTPUT FALLING,SLOWER RATE OF DECLINE

Output index vs. previous periodOUTPUT FALLING, FASTER RATE OF DECLINE




60

5


8. PMI Output Charges indices by sector and global region7. PMI Employment indices by sector and global region6. PMI Output indices by sector and global regionDotted line = 50 = no changeDotted line = 50 = no changeDotted line = 50 = no change

Consumer Services

Technology Consumer Goods

Industrials

Basic Materials

Healthcare Financials

60

50

70

40

80

Europe

USA

Asia

30

Consumer Services


Europe

USA

Asia

Industrials

Basic Materials


70

80

40

50

60

Consumer Services


Europe

USA

Asia

Industrials

Basic Materials


45

60

55

50

65

Aside from Healthcare, the fastest rates of output expansion were in Automobiles & Auto Parts (58.5), followed by Industrial Goods (56.2) and Household Products (56.0). There was a robust and accelerated rise in production of Technology Equipment (55.5), with the category recording its fastest growth since June 2018.US and Asia record sharp rises in Consumer Goods output At 66.1 in November, the index measuring Consumer Goods output in the US picked up sharply in November and

hospitality sector. Consumer Services registered just 25.5 in November, its worst reading since May. Positive trends in Europe were Basic Materials (55.7) and Technology (54.7), areas of the economy without direct restrictions on trade. Highlighting the divergence between Europe and the rest of the world, the PMI index measuring global output excluding the euro area was still consistent with robust growth. At 54.8 in November, this index was up from 54.1 in October and the highest since September 2014.

exceeded by a wide margin the equivalent index for Consumer Services (45.5). Healthcare (72.1), Industrials (60.4) and Financials (60.3) categories were also out-performing sectors in November. Asia was the only global region to record higher levels of output across all seven broad sectors during November, led by Consumer Goods output (56.4). In contrast, the European Consumer Goods sector (48.3) fell back into decline, mainly reflecting a slump in food and drink production amid renewed business shutdowns across the

Global employment trend strengthens, led by record increase in the US The US employment index rose to its highest in the survey’s 11-year history as businesses rehired staff in response to recovering economic conditions. Five of the seven broad sectors registered a rise in employment in November, led by Healthcare and Financials.Asia also registered higher employment in five of the seven broad sectors in November, although at rates of expansion much softer than in the US. Meanwhile, only two sectors

in Europe saw an increase in hiring, namely Technology and Healthcare. Consumer Services saw a marked fall in employment amid tightening restrictions.Inflationary pressures quicken, leading to greater pass-through of costs Globally, private sector firms raised average prices charged at a solid rate in November. The slowdown of freight arrivals, limited supply of inputs, and the pass-through of higher costs to clients led to the quickest overall rise in charges for more than two years.

US Financials saw the greatest rise in average output charges in November. Notably, all seven US sectors registered higher charges compared to October, with six of these recording higher rates than in both Europe and Asia. The only exception was Technology, as Asia saw a stronger uptick in output prices. Subdued inflationary trends were again signalled by most sectors in Europe, with Consumer Services, Financials and Industrials each registering a greater reduction in charges than in October.

6

UK Recovery Tracker – UK recovery

UK recovery

9. UK sector performance in November vs global index 10. UK sector performance in November vs Europe index 11. UK sector performance in November vs April50 = no change 50 = no change50 = no change

The UK Purchasing Managers’ Index signalled a fall in national output for the first time in five months in November, pointing to a renewed negative impact from Covid-19 measures on the economy.

Encouragingly though, the overall contraction in output was marginal and far softer than the one seen at the height of the first national lockdown during April. This was likely due to lockdown measures,

particularly for manufacturing firms, being much looser this time, and clearly illustrates that collateral damage to other parts of the UK economy has been much more limited than in the second quarter of 2020.

Tourism & Recreation continues to lead underperformance Nevertheless, with the closure of non-essential services in England from 5th November, and similarly strict pandemic

measures in Wales, Scotland and Northern Ireland, the UK underperformed against the global benchmark for a second month in a row during November. Moreover, eight of the fourteen monitored UK sectors recorded a lower output index than their global equivalent, matching that seen in October.

As Chart 9 shows, underperformance was most severe in the Tourism &

Recreation category, with the output index more than 28 points below the global level and at its lowest since April. Real Estate and Beverages & Food also registered weak performances, as firms saw contractions in output that contrasted with upturns in the global economy.

On the positive side, the UK Metals & Mining industry continued to perform very strongly in November,

recording growth above the global level for the sixth month running. Tech companies also did well, with both Technology Equipment and Software & Services posting faster expansions than those seen abroad.

Moreover, with much of Europe also experiencing rising Covid-19 cases and tighter containment measures, the UK performed better in most categories midway through the

fourth quarter. Only Tourism & Recreation and Beverages & Food were behind the European average, and just marginally, see Chart 10.

It was also notable that all fourteen UK sectors remained higher that their level recorded in April at the height of the first national lockdown, as illustrated by Chart 11. Most categories that saw the greatest difference in the output index were on the

Manufacturing

Services

CombinedTourism & Recreation

Transportation

ChemicalsSoftware & Services

Healthcare

Metals & Mining

Industrial Goods

Beverages& Food

UK sector PMI output index (November)

Higher in UK

Global sector PMI output index (November)

30

1010

40

20

30 50 70

50

70

80

60

20 40 60 80

Higher globally


Banks

Household Products

Real Estate

Industrial Services

Technology Equipment

Manufacturing

Services

CombinedTourism & Recreation

Transportation


Healthcare

Metals &Mining

Industrial Goods

Beverages& Food


Higher in UK

Europe sector PMI output index (November)

30

1010

40

20

30 50 70

50

70

80

60

20 40 60 80

Higher in Europe


BanksHousehold Products

Real Estate

Industrial Services


Manufacturing

Services

Combined

Tourism &Recreation

Transportation

ChemicalsSoftware & ServicesHealthcare

Metals & Mining

Industrial Goods

Beverages& Food


UK sector PMI output index (April)

30

00

40

20

30 50 70

50

70

80

60

20 40 60 80

Automobiles& Auto Parts

BanksHousehold Products

RealEstate

Industrial Services


10

10

Higher in April

Higher in Nov

7


12. UK sectors ranked by Output Index

13. UK sectors ranked by Business Expectations

manufacturing side, although services firms also performed much better, in particular those providing business-related services.

Small number of lockdown-hit sectors drive fall in activity The two-track nature of the UK’s economic recovery appeared to widen in November, as consumer-facing sectors suffered from national lockdown measures but manufacturers continued to scale up production. As Chart 12 shows, this was evidenced by a further increase in the difference between the best- and worst-performing sectors from October’s previous survey record, now standing at 55 index points.

As expected, measures that caused the temporary closure of some consumer-serving businesses led to a severe drop in Tourism & Recreation activity. This fed through to a sharp and faster drop in Beverages & Food output, as suppliers to pubs and restaurants reported falling sales. Meanwhile, there was a renewed downturn in Real

Estate activity in November. Transportation was the only remaining sector seeing a decline, albeit one that was the slowest in four months.

Ten of the fourteen monitored sectors saw overall growth during November, highlighting that the fall in output at the UK level was extremely concentrated in parts of the economy hit by lockdown measures. Furthermore, five of these recorded a higher output index than in October, with the strongest uptick seen in the Technology Equipment sector.

Metals & Mining led the growth rankings for the third month running, with Automobiles & Auto Parts again in second place. Technology Equipment and Industrial Goods were third and fourth respectively, while Software & Services was the strongest-performing services category in fifth.

Manufacturing firms indicated that part of the increase in output was driven by higher export orders in November, as European clients brought forward purchases before the

Brexit transition ends. The upcoming deadline on 31st December also led to input stockpiling at factories for the first time since October 2019.

Vaccines boost business optimism to highest since 2015 While business activity fell in November, the influx of positive news around vaccine development meant UK companies were much more confident about a recovery in 2021. In fact, the degree of optimism for the 12-month horizon was the best recorded since March 2015.

Importantly, the strengthening of expectations was greatest among those sectors that have suffered most from Covid-19 lockdown measures, such as Tourism & Recreation and Real Estate, as firms noted increased confidence that the pandemic would be over in one year’s time and demand conditions should be restored, see Chart 13. Software & Services also registered a large uptick in confidence and now tops the rankings across the fourteen

sectors, followed by Healthcare.

Moreover, after the November survey was conducted, the UK has approved and began a rollout of a Covid-19 vaccine, which will likely give companies even greater cause for optimism in December.

Three of the fourteen sectors did register a fall in business sentiment in the latest survey period, with Automobiles & Auto Parts seeing the largest drop after being the most confident in October. The fall reflected concerns about trading in the absence of an EU trade deal, but also came amid higher uncertainty about investment plans at global automotive manufacturers as governments bring forward plans to ban petrol and diesel cars.

November 2020 October 2020


Industrial Services

60 70 8050403010

Metals & Mining


Real Estate

Banks

Transportation



HealthcareHousehold Products

Technology EquipmentIndustrial Goods

Beverages & Food

20

Industrial Services

80 907040 6050

Metals & Mining


Real Estate

BanksTransportation


Chemicals

Software & ServicesHealthcare

Household Products


Industrial Goods

Beverages & Food

Gap between best and worst performing UK sectors was the largest since the survey began in 1998

55 index points

8

14. UK sectors ranked by Employment Index

15. UK sectors ranked by Output Charges Index

Staff cuts widen to more sectors The UK’s labour market appeared to suffer from the stepping up of national lockdown measures, as November data showed a steep and accelerated decline in employment. In addition, ten of the fourteen monitored sectors saw a fall in jobs, up from seven in October, see Chart 14.

Four of the five sectors seeing the largest reductions were those where output decreased in November. Tourism & Recreation firms cut jobs at an even sharper rate than in the previous month, as was also the case for Transportation companies. Only Beverages & Food and Industrial Goods saw a softer rate of job shedding.

Meanwhile, solid rises in employment were recorded across Healthcare, Technology Equipment and Software & Services, while Chemicals manufacturers saw a slight upturn in jobs.

Output charges rise strongly at manufacturers Most UK sectors continued to raise their output charges

during November, with the largest upticks commonly seen among manufacturers. In fact, the rate of charge inflation on the manufacturing side was the fastest since June 2019.

Higher selling prices were often a consequence of rising input costs, with producers seeing the steepest increase in two years. A number of raw materials were marked up in price, according to surveyed firms, particularly metals and food commodities, as global demand continued to recover from the pandemic.

As Chart 15 shows, average charges across the UK private sector as a whole were broadly stable, as services firms continued to lower overall prices in response to weak demand. These falls were mainly among Tourism & Recreation and Real Estate firms, although both recorded slower rates of discounting than in October.

Panel Comments Section Alongside the standard response data, IHS Markit’s PMI surveys invite contributing companies to provide additional qualitative


50 = no change

50 = no change

information on the reasons as to why these variables (such as activity, new orders, exports, input prices, inventories, employment and future expectations) have changed from the previous month. A panel comments tool tracks the frequency of words or phrases mentioned in these qualitative replies and some of the key findings are presented here.

Vaccines give firms hope of recovery Looking at the qualitative reasons on the future output question, our panel comments tool shows a sharp uplift in optimism was linked to positive news around Covid-19 vaccines. Globally, mentions of ‘vaccines’ related to a positive output forecast were more than three times that seen in October, with mentions by UK companies also up steeply and the highest recorded by the survey, see Chart 16.

the number of companies mentioning 'vaccines' in relation to a positive output forecast, compared with October

of companies mentioning longer supplier lead times, directly cited issues at UK ports

3x

22%



Metals & Mining


Real Estate

Banks

Transportation

Industrial Services



Healthcare

Household Products


Industrial Goods

Beverages & Food

50 604020 30

Tourism & RecreationReal Estate

Banks

Transportation

Industrial Services


Chemicals

Software & Services

Healthcare

Metals & Mining

Household Products


Industrial GoodsBeverages & Food

50 55 65604540

9

16. Frequency of UK and Global positive output predictions linked to vaccines

17. Panel comment tracker: "furlough", "redundancy", and " recall"

18. Panel comment tracker: "Ports"

Portion of UK panel comments mentioning furlough / redundancy / recall in relation to employment question

Percentage of all comments about longer supplier delivery times responses mentioning "Ports"Relative index, where 100% = highest monthly number reported since January 2020

Redundancies remain high but furloughing rises On the jobs side, anecdotal evidence continued to signal a relatively high number of redundancies in November. Around 19% of comments on the employment question were related to layoffs, although this eased slightly to the lowest in five months.

The extension of the furlough scheme to March 2021, as well

as stricter lockdown measures, led some businesses to place more workers on furlough in November, see Chart 17. The proportion citing furlough exceeded those reporting the recall of staff in November, suggesting some firms are now looking to utilise additional government support in the months ahead in response to continued business disruptions.

Delays at UK ports disrupt supply chains ahead of Brexit deadline A final striking trend seen in the latest PMI surveys was a much steeper lengthening of suppliers’ delivery times among UK manufacturers. November data signalled one of the worst months for supply chain disruptions since the index began in 1992, exceeded only by the record slump in vendor

performance from March to June 2020.

Manufacturers reporting longer lead times often noted delays at Felixstowe and other UK ports, as well as generally slower shipping of global freight. Around 22% of comments about longer supplier lead times directly cited issues at UK ports, which was more than double that seen in October


(10%) and much higher than in the spring, see Chart 18.

Widespread reports of stock building ahead of Brexit, alongside a temporary rise in export orders from EU clients ahead of the 31st December deadline, were also reported as having added to pressure on supply chain capacity.

Longer wait times for critical inputs are therefore emerging

as a potential headwind to the UK manufacturing recovery and have become a source of higher cost pressures. Moreover, the latest PMI data illustrates that UK supply chains are already overstretched in the run up to the Brexit deadline, with disruptions due to the pandemic serving to narrow the scope for manufacturers to respond to a no-deal outcome.

Nov-20Jul-20 Aug -20May-20Apr-20Mar-20

Companies furloughing staff

Companies making redundancies

Companies recalling staff

0%

10%

20%

30%

40%

50%

60%

Jun-20 Sept-20 Oct-20 SepMayMarJan-20

0%

5%

10%

15%

25%

Jul Nov

UK

20%

AugAprFeb Jun OctSepMayMarJan-20

0%

20%

40%

60%

100%

Jul Nov

UK

80%

AugAprFeb Jun Oct

Global

10

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

10

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

UK Recovery Tracker – Breakdown of UK sectors

Breakdown of UK sectors

In this section, we provide some additional detail for the 14 UK sectors covered in this report.

This chartbook provides a timely update of how far recoveries have progressed, and the degree to which the sector has tracked the overall UK economy benchmark (see opposite).

*Detail for the Construction Sector, which is available as a separate PMI survey from IHS Markit, is provided for additional insight.

UK Employment Index

UK Output Index November 2020: 49.0

November 2020: 42.3

November 2020: 73.1UK Future Output Index Click an icon to switch to the relevant page, or scroll through one by one

50 = no change Source: IHS Markit

11



Banks

Employment Index

Employment Index

Output Index

Output Index

November 2020: 63.3

November 2020: 54.9

November 2020: 47.8

November 2020: 48.2

November 2020: 73.7

November 2020: 69.2

Future Output Index

Future Output Index

0

10

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

10

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

0

10

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

10

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

50

60

70

80

90

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Source: IHS Markit

UK Employment Index November 2020: 42.3UK Output Index November 2020: 49.0 UK Future Output Index November 2020: 73.1 50 = no change

12


Beverages & Food

Chemicals

10

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

10

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

50

60

70

80

90

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

50

60

70

80

90

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Employment Index

Employment Index

Output Index

Output Index

November 2020: 39.9

November 2020: 57.6

November 2020: 40.0

November 2020: 50.6

November 2020: 77.4

November 2020: 70.0

Future Output Index

Future Output Index

Source: IHS Markit

50 = no changeUK Employment Index November 2020: 42.3UK Output Index November 2020: 49.0 UK Future Output Index November 2020: 73.1

13


Healthcare

Household Products

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

10

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

10

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

40

50

60

70

80

90

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

50

60

70

80

90

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Employment Index

Employment Index

Output Index

Output Index

November 2020: 52.8

November 2020: 52.7

November 2020: 55.7

November 2020: 46.0

November 2020: 78.0

November 2020: 73.4

Future Output Index

Future Output Index

Source: IHS Markit


14


Industrial Goods

Industrial Services

0

10

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

10

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

0

10

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

10

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

50

60

70

80

90

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

40

50

60

70

80

90

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Employment Index

Employment Index

Output Index

Output Index

November 2020: 60.3

November 2020: 51.7

November 2020: 48.8

November 2020: 43.4

November 2020: 72.8

November 2020: 69.6

Future Output Index

Future Output Index

Source: IHS Markit


15


Metals & Mining

Real Estate

10

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

0

10

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

10

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

0

10

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

50

60

70

80

90

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

30

40

50

60

70

80

90

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Employment Index

Employment Index

Output Index

Output Index

November 2020: 70.7

November 2020: 40.6

November 2020: 47.9

November 2020: 44.6

November 2020: 75.0

November 2020: 57.4

Future Output Index

Future Output Index

Source: IHS Markit


16


Software & Services


10

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

10

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

10

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

10

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

50

60

70

80

90

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

30

40

50

60

70

80

90

100

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Employment Index

Employment Index

Output Index

Output Index

November 2020: 59.2

November 2020: 61.3

November 2020: 53.4

November 2020: 55.6

November 2020: 80.6

November 2020: 74.1

Future Output Index

Future Output Index

Source: IHS Markit


17



Transportation

0

10

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

10

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

0

10

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

10

20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

30

40

50

60

70

80

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Employment Index

Employment Index

Output Index

Output Index

November 2020: 15.6

November 2020: 47.5

November 2020: 20.4

November 2020: 38.4

November 2020: 72.3

November 2020: 60.9

Future Output Index

Future Output Index

Source: IHS Markit


18


Construction

0

10

20

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '2020

30

40

50

60

70

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '2040

50

60

70

80

90

'09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20

Employment IndexOutput Index November 2020: 54.7 November 2020: 47.2 November 2020: 67.2Future Output Index

Source: IHS Markit


19

UK Recovery Tracker – Methodology

MethodologyThe Lloyds Bank UK Recovery Tracker includes indices compiled from responses to IHS Markit's UK manufacturing, services and construction PMI® survey panels, covering over 1,500 private sector companies.

The report also features IHS Markit Global Sector PMI indices, which are compiled by IHS Markit from responses to questionnaires sent to purchasing managers in IHS Markit's global PMI survey panels, covering over 27,000 private sector companies in more than 40 countries.

IHS Markit maps individual company responses to industry sectors according to standard industry classification (SIC) codes, covering the basic materials, consumer goods, consumer services, financials, healthcare, industrials and technology sectors across varying tiers of detail.

The Lloyds Bank UK Recovery Tracker monitors the following 14 individual UK and Global sectors:

Chemicals

Metals & Mining


Beverages & Food

Household Products


Banks

Real Estate

Healthcare

Industrial Goods

Industrial Services

Transportation


Software & Services

JEAVON LOLAYManaging Director, Economics and Market Insights, Global Transaction Banking, Lloyds Bank

T: +44 738 534 7141 E: [email protected]

ANDY BROWNDirector, Commercialisation & Propositions, Global Transaction Banking, Lloyds Bank


TIM MOOREDirector, Economic Indices, IHS Markit


The editors

Click here or scan the code to read our Road to Recovery interactive guide

Euromoney Awards for Excellence 2020 – Western Europe's Best Digital Bank:Lloyds Banking Group

Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. Global survey responses are weighted by country of origin, based on sectoral gross value added. A diffusion index is calculated for each survey variable.

The index is the sum of the percentage of ‘higher’ responses and half the percentage of ‘unchanged’ responses. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease. The indices are then seasonally adjusted.

The Purchasing Managers’ Index (PMI) survey methodology has developed an outstanding reputation for providing the most up-to-date possible indication of what is really happening in the private sector economy by tracking variables such as sales, employment, inventories and prices. The indices are widely used by businesses, governments and economic analysts in financial institutions to help better understand business conditions and guide corporate and investment strategy. In particular, central banks in many countries use the data to help make interest rate decisions. PMI surveys are the first indicators of economic conditions published each month and are therefore available well ahead of comparable data produced by government bodies.

For further information on the PMI survey methodology please contact [email protected].

mailto:jeavon.lolay%40lloydsbanking.com?subject=mailto:andrew.ad.brown%40lloydsbanking.com?subject=mailto:[email protected]://lloyds.turtl.co/story/coronavirus-support-for-your-business/

20

UK Recovery Tracker – Important Information

IMPORTANT INFORMATIONThis document has been prepared for information purposes only and must not be distributed, in whole or in part, to any person without the prior consent of Lloyds Bank plc (together with its affiliates, “Lloyds Bank”). This document should be regarded as a marketing communication, it is not intended to be investment research and has not been prepared in accordance with legal requirements to promote the independence of investment research and should not necessarily be considered objective or unbiased. This document is not independent from Lloyds Bank’s proprietary interests, which may conflict with your interests. The authors of this document may know the nature of Lloyds Bank’s proprietary interests or strategies; Lloyds Bank may engage in transactions in a manner inconsistent with the views expressed in this document; and Lloyds Bank’s salespeople, traders and other professionals may provide oral or written market commentary or strategies to clients which may conflict with the opinions expressed in this document. Securities services offered in the United States are offered by Lloyds Securities Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority.

Any views, opinions or forecast expressed in this document represent the views or opinions of the author and are not intended to be, and should not be viewed as advice or a recommendation. Lloyds Bank makes no representation and gives no advice in respect of legal, regulatory, tax or accounting matters in any applicable jurisdiction. You should make your own independent evaluation, based on your own knowledge and experience and any professional advice which you may have sought, on the applicability and relevance of the information contained in this document.

The material contained in this document has been prepared on the basis of publicly available information believed to be reliable and whilst Lloyds Bank has exercised reasonable care in its preparation, no representation or warranty, as to the accuracy, reliability or completeness of the information, express or implied, is given. This document is current at the date of publication and the content is subject to change without notice. We do not accept any obligation to any recipient to update or correct this information. Lloyds Bank, its directors, officers and employees are not responsible and accept no liability for the impact of reliance on, or any decisions made based upon, the information, views, forecasts or opinion expressed.

Lloyds Banking Group plc and its subsidiaries may participate in benchmarks in any one or more of the following capacities; as administrator, submitter or user. Benchmarks may be referenced by Lloyds Banking Group plc for internal purposes or used to reference products, services or transactions which we provide or carry out with you. More information about Lloyds Banking Group plc’s participation in benchmarks is set out in the Benchmark Transparency Statement which is available on our website.

This document has been prepared by Lloyds Bank. Lloyds Bank is a trading name of Lloyds Bank plc, Bank of Scotland plc and Lloyds Bank Corporate Markets plc. Lloyds Bank plc. Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no. 2065. Bank of Scotland plc. Registered Office: The Mound, Edinburgh EH1 1YZ. Registered in Scotland no. SC327000. Lloyds Bank Corporate Markets plc. Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no. 10399850. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278, 169628 and 763256 respectively.

Lloyds Bank Corporate Markets plc, Singapore Branch. Registered Office: 138 Market Street #21-01 Capitagreen, Singapore 048946. Registered in Singapore UEN: T18FC0067A. Licensed and regulated by the Monetary Authority of Singapore. Your contractual counterparty will be Lloyds Bank Corporate Markets plc if you enter into any product or transaction with us in Singapore.


21

Calls may be monitored or recorded in case we need to check we have carried out your instructions correctly and to help improve our quality of service. Please note that any data sent via e-mail is not secure and could be read by others.

Please contact us if you would like this information in an alternative format such as Braille, large print or audio.

Find out more

December 2020

resources.lloydsbank.com/economics-and-market-insights

Speak to your Relationship Manager

uk.linkedin.com/company/lloyds-bank-commercial-banking

lloydsbank.com/commercialbanking

lloydsbank.com/help-guidance/coronavirus

twitter.com/lloydsbankbiz

https://lloydsbank.com/commercialbanking

BevFoodandChemicalsHealthandHouseAutoandBanksIndustrialMetalsandRealEstateSoftwareandTechTourismandTransportConstruction

Button 33: Button 34: Button 38: Button 37: Button 40: Button 39: 4: Button 32: Button 31: Button 27: Button 28: Button 29: Button 30: Button 55: Button 58:

uk recovery tracker · the global pmi output index registered its fifth consecutive month of...

Documents