UK businesses outperformed their international counterparts on a series of metrics tracking recovery from Covid-19 during July, according to Lloyds Bank.
The Lloyds Bank UK Recovery Tracker’s newly debuted monthly version demonstrated that UK businesses’ output increased faster than the global benchmark in 12 of the 14 sectors monitored;
A reading of above 50 signals output is rising, while a reading below 50 indicates output is falling. The July PMI 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 54.9 and the USA at 50.3.
Overall, the World PMI rose to 50.8 in July from 47.8 in June with increased output across manufacturing and service sectors,
However, Lloyds cautions that the figures should be viewed in the context of the historic lows recorded during the second quarter of 2020. All 14 sectors underperformed the global benchmark in April.
Yet the proportion of UK firms reporting lower output and attributing this to Covid-19 has fallen every month since the height of lockdown early in the second quarter.
Some 67% of manufacturers cited lower output caused by the pandemic during April, but by July the number of survey respondents reporting a decline in output due to Covid-19 had fallen to 15%.
The manufacturing industry underpinned the overall increase in UK output during July.
Of the manufacturing sub-sectors analysed by Lloyds Bank, those operating in metals and mining reported the greatest rise in output during the month – with a reading of 75 – due to increased demand for manufacturing materials and sales to reopened automotive plants.
Producers of chemicals (66) and machinery and equipment (57) all benefited from the same demand trends.
The proportion of firms that mentioned redundancies when reporting on their staffing trends is now level with those that mention furloughing’ staff with 23% mentioning them in each case.
Numbers of survey respondents that mention ‘recalling or rehiring staff’ has increased every month since April, with 14% mentioning this in July, up from 1% in April.
Head of economics and market insight for Lloyds Bank Commercial Banking Jeavon Lolay said:
“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.”