UK companies lead lockdown recovery with output gains
● New Bank of Scotland recovery tracker shows how firms fare in a global context
Businesses in the UK are outperforming their international peers as they attempt to gain traction following the easing of lockdown measures, according to a Bank of Scotland report.
The bank’s Recovery Tracker, produced along with IHS Markit, is said to provide a “unique insight” into the shape and pace of Britain’s recovery following the disruption caused by the coronavirus emergency.
From a global perspective, purchasing managers’s index (PMI) data point to a general shift upwards as lockdown measures are eased in most countries. The World PMI rose to 50.8 in July from 47.8 in June with increased output across both the manufacturing and service sectors.
The debut edition of the monthly tracker reveals that UK businesses’ output increased faster than the global benchmark in 12 of the 14 sectors monitored, indicating that domestic firms recovered more rapidly than their counterparts in other parts of the world last month.
A PMI reading above 50 denotes rising output, while a reading below 50 indicates that output is in decline.
The July result builds on gradual gains from an exceptionally low point for most countries, the majority now above the key 50 level, with the UK composite index reaching 57, comparing favourably with the euro area at 54.9 and the US at 50.3.
Jeavon Lolay, head of economics and market insight at Lloyds Bank commercial banking, said: “Covid-19 has brought about a period of concentrated disruption unlike anything we’ve seen before. Now, as lockdown measures around the world begin to ease, we can better explore the potential shape and pace of the UK’S recovery from the historic lows recorded last quarter.
“The Bank of Scotland UK recovery tracker provides a monthly analysis of how UK firms are faring in a global context – and takes a deep dive into the key factors underpinning momentum behind the economic recovery.
“Our debut edition paints an encouraging early picture for a number of domestic industries, although the major caveat is that output is rising from an extremely low base, and the risk of further local lockdowns is very real.
“Future editions will give a clearer direction of travel for the UK economy, as Covid-19 restrictions evolve and demand profiles change.”
Ed Thurman, managing director, global transaction banking, added: “The impact of coronavirus on business activity is hard to understate. The UK recovery tracker will be valuable in analysing the shape, pace and scale of the fightback as firms seek to overcome the challenges of this pandemic.”
UK metals and mining (reading of 75), software services (59), beverages and food (63) and chemicals (66) were furthest ahead of global recovery trends. The two domestic sectors to fall behind the global recovery curve were tourism and technology equipment.