Coronavirus: Britain's manufacturing exports hit all-time low
Britain’s manufacturing exports have hit a record low, as COVID-19 wreaks havoc on supply chains and demand.
UK manufacturing exports fell to just 34.6 on the Lloyds Bank International Trade Index for the period between April and June 2020 — a drop from 46.8 in the previous quarter.
This represents the fastest decline since data collection began in 1996, and is a significantly lower reading than the previous low of 38.8, which was recorded during the 2009 global financial crisis.
On the index, a reading below 50 signals a decline in new export orders, while a reading above 50 indicates growth.
The decline is likely driven by the impact of the coronavirus pandemic on both international supply chains and falling overseas demand for British goods and services, the report suggests. Of manufacturers who experienced a downturn in overseas orders, 93% blamed COVID-19 for “shrinking demand”, “widespread business closures” and “delays to export projects.”
READ MORE: UK airports predict £4bn in lost revenue this year
Basic metals (28.3) and automotive (31.5) exports were hit hardest, as car production in Europe was shut down.
Meanwhile, chemicals and plastics (41.1) — including pharmaceuticals and healthcare products — fell at a slower rate than other goods. This was partly due to forward-purchasing by overseas buyers in expectation of delivery delays, the research found.
June saw early signs of international demand returning, with appetite for British consumer goods increasing. Clothing and textiles (50.7) and other manufacturing (56.7) exports grew — including sports and leisure equipment, furniture, and luxury items such as jewellery.
UK services firms also saw a sharp drop in overseas work, measuring 29.2 in the second quarter of the year, down from 42.7 in the first, according to the Services New Export Business Index. This once again represents the fastest decline since the index began in 2014.
The fall was mainly due to international travel restrictions. Business-to-business (28.5), transport and communication (29.8), and technology (29.8) services were all greatly affected, the data shows.
READ MORE: Pandemic drives amateur investor trading boom
The majority of UK export markets, including the EU and North America, also saw sharp economic declines, driving global demand for British goods and services to a record low of 35.2.
China, however, was the only UK export market to see an increase, with a reading of 52.6, compared with 42 in the first quarter of the year. This is likely to due the country’s lockdown measures easing, the data suggests.
“The results demonstrate the full impact of the pandemic as swathes of the global trade markets shut down amid efforts to help contain the spread of the virus,” said Gwynne Master, global head of trade at Lloyds Bank Global Transaction Banking.
“While it is too early to talk about the trajectory of recovery, it is encouraging to see enhanced external demand, signs that China’s economy is stabilising, and some UK consumer goods export growth in June.
“Government schemes and finance options continue to be made readily available, which will help UK exporters continue to trade, to position for a return to normality to international trade, and to prepare now for potential future disruption.”