Private sector activity fell at the fastest pace since 2003 in the quarter to May, since the CBI Growth Indicator began (-63% from -25% in quarter to April).
The monthly composite measure, based on surveys with a total of 1033 respondents, showed a survey record decline across services (-68% from -31%, survey began in 1998), distribution (-54% from -13%, question first asked in 2003) and manufacturing (-54% from -21%, data begins in 1995).
Expectations for the quarter ahead are for a similarly steep decline, confirming that no sector has escaped the significant fallout from the COVID-19 crisis.
COVID-19 specific questions added to the survey reveal that more than half (53%) of firms have temporarily laid off staff (up from 48% in April), with around one in six doing so permanently (17% up from 13% in April).
Other COVID-19 specific data includes (previous month in brackets):
- 65% of firms report coronavirus having a significantly negative impact on domestic sales (unchanged from April).
- There was a slight uptick in firms reporting a moderately negative effect on domestic sales (24% from 17%).
- 42% of firms remain in a state of total shutdown of UK operations / stores / production / offices (43%).
- Shipping delays (25%, from 29% in April) and shortages of materials and goods (23% from 26%) have eased slightly, whilst those reporting increased cost pressures has risen (40% from 35%).
- The number of firms reporting a hit to productivity (43% from 42%) and capacity constraints (25% from 23%) remains similar.
- The number of firms reporting cash flow issues has fallen somewhat (68% from 79%), as have the number of firms who are facing difficulties meeting tax liabilities (25% from 31%). However, the number of firms facing constraints on the availability of external finance remains broadly similar (34% from 33%).
Alpesh Paleja, CBI Lead Economist, said:
“The continued impact of COVID-19 on economic activity is plain for all to see. While the unprecedented support from monetary and fiscal policy is very welcome, the grim reality of any crisis is that not every firm and job can be saved.
“With lockdown restrictions easing, ensuring people can return to work safely and gradually remains vitally important, with progress resting on the successful interaction between the new test and trace service alongside increasing COVID-secure transport capacity.
“As we move through this crisis, the need for government, business and civil society to work together to help our economy recover quickly and sustainably grows ever stronger.”