Page 31 - Industrial Technology EXTRA - Brexit Briefing

GDP QUARTERLY NATIONAL ACCOUNTS

production output increased by a revised
FIG 3. UK GDP IN Q3 WAS 8.6% LOWER THAN THE END OF 2019
14.7%, and construction output expanded by
a revised 41.2% (Figure 4).

Despite growth in the latest quarter, the levels
of output for these sectors remain below
those seen before the impact of the
coronavirus pandemic, the extent of which
varies within these industries. Today’s
estimates show that output levels in services,
production and construction in Quarter 3
2020 were 8.9%, 6.2% and 7.0% below their
Quarter 4 (Oct to Dec) 2019 levels
respectively.

Manufacturing output grew by 19.5% in
Quarter 3 2020, though output remains 7.1%
below where it was in Quarter 4 2019. The
increase in manufacturing output in the third
FIG 4. SERVICES, PRODUCTION AND CONSTRUCTION OUTPUT quarter reflects growth in 12 out of the 13
manufacturing sub-sectors, most notably the
manufacture of transport equipment.
However, manufacturing output of transport
equipment remains 23.0% below Quarter 4
2019 levels.

According to the Society of Motor
Manufacturers and Traders (SMMT), UK car
production in September 2020 was 5.0%
lower than in the previous year. This was
driven by production for export, which
declined 9.7% compared with the previous
year because of a fall in shipments to
important overseas destinations including
China, the EU and the United States.
Conversely, output for the domestic market
the implied GDP deflator increased by a They also likely reflect the structural features – which accounts for less than one quarter of
revised 5.8%, an easing from the previous of these economies as some industries are car production – grew by 14.5% compared
quarter. more exposed to the response to the with a year ago, “largely a result of new
pandemic, such as those that involve models that were in ‘run out’ in the same
Other countries have now published interactions with other people. month last year”.
estimates of GDP for the third quarter of
2020. These estimates show record rises in Additionally, they might also reflect The Quarter 3 2020 Bank of England Agents’
GDP in the third quarter of 2020 following differences in how non-market output is Summary of Business Conditions stated that
record declines in the previous quarter. measured in different countries, specifically “automotive manufacturing picked up,
Figure 3 shows that the level of GDP in each the extent to which volume indicators are in especially for electric vehicles – but was still
of these countries remains below where it place and how these have been affected by significantly below normal”. It also cited that
was before the effects of the coronavirus the pandemic. Consistent with international output in the aviation industry was well below
(Covid-19) pandemic. guidance, the ONS uses direct measures of normal levels, “reflecting the drop in demand
the volume of activity to estimate the volume for commercial flights and less maintenance
Considering the cumulative fall in GDP in the of non-market output such as health and for existing fleet”.
first three quarters of this year, the UK education. International comparisons should
experienced the second-largest drop be made with care if the estimates being This was partially offset by a 2.6% fall in the
amongst the countries shown in Figure 3, compared are based on different manufacture of pharmaceutical products,
with Spain experiencing the largest approaches to measuring the volume of non- though this decline mainly reflects a fallback
cumulative fall. The UK economy was 8.6% market output. from a general higher demand for
lower in Quarter 3 2020 compared with the pharmaceutical products in the second
end of 2019. This is around twice as large as Output levels quarter. Overall, manufacturing output of
the cumulative drop in GDP in other G7 The quarterly increases in services, pharmaceutical products remains 23.9%
countries. production and construction output in higher than where it was at the end of 2019.
Quarter 3 (July to Sept) 2020 were the According to the Quarter 3 2020 Bank of
It is important to note that the extent of these largest on record, mainly reflecting the England Agents’ Summary of Business
cumulative falls has not been uniform across easing of lockdown restrictions through this Conditions, “demand for some chemicals,
countries, in part reflecting the spread of the three-month period and base effects from healthcare and personal protective
virus in each country, the timing of lockdown the steep contractions of the second quarter equipment remained strong, though sales of
measures and when these were lifted, as well (Apr to June). Services output grew by a some pharmaceuticals had been depressed
as the voluntary forms of social distancing. revised 14.7% in Quarter 3 2020, while by prioritisation of Covid-19 treatments”.

INDUSTRIAL TECHNOLOGY EXTRA – WINTER 2021 31