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November 12, 2020UK GDP Q3 2020 (FIRST ESTIMATE) The Office for National Statistics (ONS)' first estimate of UK Gross Domestic Product (seasonally adjusted annualized rate) for Q3 2020 reports an increase of 78.0% following the 58.7% decline in Q2. These are the largest quarterly changes on record since 1955 when ONS quarterly records began, which signifies the impact the COVID-19 pandemic is having on the UK economy. UK GDP remained 9.7% below where it was at the end of 2019.
The monthly data shows that momentum was stronger at beginning of quarter (July) than at the end (September) with easing of lockdown measures driving service activity including in accommodation and food services. Wholesale and retail activity grew with car showrooms reopening and pent-up demand. Online sales continue to be at a record high proportion of retail activity. Overall, Q3 service output was 10% lower than at the end of 2019.
Manufacturing activity was up 18.7% in Q3 following the 21.1% decline in Q2 as most sectors partially recovered. Only pharmaceuticals, (121.8%) chemicals (104.8%), and electrical equipment manufacturing (101%) are operating above pre-pandemic levels. Coke and petroleum (72.5%), transportation equipment (75.4%) and machinery and equipment n.e.c (82%) are the most below pre-pandemic levels.
Output of electricity, gas, steam and air grew 8.1% in Q3 reflecting demand as factories and premises reopened.
Construction output increased 41.7% but remains 11.5% below pre-pandemic levels. New work, particularly in housing made a large impact to the sector and repair and maintenance also increased.
Compared to Q3 2019, UK GDP was 9.6% lower in Q3 2020. Comparing Q1-Q3 2020 to Q1-Q3 2019, UK GDP is 11.0% lower.
A seasonally adjusted annualized rate shows what the percent change would be if the quarterly rate continued for four quarters. It is computed by compounding the quarterly rate for four quarters. Reporting annualized rates facilitates comparability between annual and quarterly growth but can exaggerate change when series are volatile. The COVID-19 shocks do not indicate a contraction of UK GDP by 58.7 per cent in Q2 or 78.0 expansion in Q3. It would take four quarters of compounded contraction at the same pace as reported to change UK GDP by that amount. Real GDP in Q3 grew 15.5 per cent after contracting 19.8 per cent in Q2.
Office for National Statistics
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