Monthly gross domestic product (GDP) increased by 1.2% during December 2020 but remained 6.3% below February 2020 levels.
In December 2020, services grew by 1.7% following the easing of restrictions in many parts of the UK early in the month, while construction fell by 2.9%; production and manufacturing growth was more subdued at 0.2% and 0.3% respectively.
Quarter 4 (Oct to Dec) 2020 saw a rise of 1.0% in GDP following a rise of 16.1% in Quarter 3 (July to Sept) 2020; however, GDP in Quarter 4 2020 was 6.6% below Quarter 4 2019 levels.
In Quarter 4 2020, there were rises from each of the main components, with services at 0.6%, production at 1.8% and construction at 4.6%.
In 2020, headline GDP declined by 9.9%, which is more than twice the fall in 2009.
The output of services industries grew by 1.7% during December 2020 and was 6.9% below the level of February 2020.
Of the 14 sub-sectors, 11 saw growth during December 2020 (Figure 4). This was led by accommodation and food service activities, wholesale, retail and motor trades, and other service activities, and accounted for over half the growth in services. These three sectors also largely contributed to the decline in November 2020 as a result of the different lockdown measures in place across parts of the UK.
Wholesale and retail trade: repair of motor vehicles
Retail grew by 0.3% during December 2020 (see Retail sales, Great Britain: December 2020), with output 2.7% above February 2020 levels for the industry.
Motor trades grew by 12.3% in December 2020, with output 9.0% below February 2020 levels. Much of the growth can be attributed to a return to "normal" trading practices in car showrooms after click and collect style trading throughout November 2020. We have also received some anecdotal evidence of strength from imports ahead of the end of the EU Exit transition period.
Wholesale (excluding motor vehicles) fell by 1.0% during December 2020 and remained 3.5% below February 2020 levels.
Accommodation and food and beverage services
This sector grew by 25.2% in December 2020, following a fall of 44.5% in November 2020. This resulted in output in the latest month being 55.6% weaker than the February 2020 level.
Food and beverage services, which includes restaurants, cafes, takeaways, pubs, canteens and catering, grew by 27.2% in December 2020 (Figure 5). This followed a fall of 40.1% during November 2020. There was a rise in returns reporting no activity for this month, increasing to 15.6% in December 2020, from 11.3% in November 2020. Despite this, restaurants and pubs that chose to remain open reported strong growth. However, the industry was 48.0% below its February 2020 level in December 2020.
Hotels and accommodation similarly increased by 17.0% during December 2020, led by stronger growth from hotels, compared with camping and caravan sites and other accommodation. Hotels and accommodation was 73.3% below its February 2020 level.
Other service activities
The other service activities sector saw growth of 18.0% in December 2020, driven by an increase in other personal service activities of 36.9%. This was led by hair and beauty. This strength is largely driven by a bounce back from the low level seen in November 2020, as a result of business restrictions being lifted in many parts of the UK.
Repair of computers and personal and household goods fell by 5.8%, while activities of membership organisations saw growth of 0.3% in December 2020.
In December 2020, the other services sector was 19.5% below February 2020 levels.
Human health and social work activities
Human health and social work activities grew by 2.4% in December 2020 because of an increase of 3.2% in human health. This was driven by a significant increase in testing and tracing activity while other health volumes were flat, leaving human health activities 0.1% below February 2020 levels. This was because of revisions from data suppliers to earlier periods, including from the impact of testing and tracing. For further detail on testing and tracing, please read the section "Consumption of government goods and services" within our GDP first quarterly estimate, UK: October to December 2020.
This sector was level with February 2020 levels.
Transportation and storage
The transportation and storage sector saw a growth of 3.1% in December 2020, with output 9.7% below February 2020 levels.
The growth in this sector was led by postal and courier activities, with growth of 5.8%. Warehousing and support activities for transportation also had a strong month, with 2.5% growth (Figure 6). Strength across both industries was because of a continued expansion in online sales.
Growth also came from air transport, which rose by 33.7% in December 2020, from a very low base. The output level of air transport in December 2020 was 89.3% below its February 2020 level.
Water transport fell by 3.4% in December 2020, particularly because of reduced activity in the final week of the month. This growth is estimated based upon the Office for National Statistics (ONS) faster indicators data, in advance of our usual data source and is subject to revision in the coming months.
Arts, entertainment and recreation
This sector saw growth of 6.7% in December 2020 and was 28.7% below its February 2020 level. Strength was led by sports activities and amusement and recreation activities, which grew by 15.6% in December 2020. Within this industry, growth was driven by elite sport, supported by growth from the easing of business restrictions in other parts of this industry.
Creative, arts and entertainment activities saw growth of 6.6%. This industry was now 60.7% below its February 2020 level. The decline in this industry over the past year can largely be attributed to declines in performing arts and operations of arts facilities, while the creative sub-industry, including authors and artists, has remained comparatively stable.
Professional, scientific and technical activities
The largest contribution to growth in this sector came from scientific research and development, which grew by 5.7% in December 2020; this industry was now 7.8% above its February 2020 level. While some of the growth in this industry may be attributed to increased research and development because of the coronavirus, the majority was still related to research and development in other areas of healthcare.
Legal activities continued to show strong growth with an increase of 1.2% in December 2020, following a growth of 2.0% in November 2020. This may be linked to strong levels of housing completions during December 2020.
Advertising and market research grew by 1.8% in December 2020, with growth attributed to a bounce back in spending from the retail sector in the lead up to the Christmas period.
Other notable growth
Employment activities grew by 2.3% in December 2020. While evidence suggested weakness from employment agencies in general, strong growth from specific industries such as retail, warehousing and courier services boosted this industry during December 2020.
Education fell by 1.0% in December 2020; this decline was related to a decrease in attendance compared with November 2020 as well as a decline from universities. This sector was 7.2% below February 2020 levels.Back to table of contents
Production output increased during December 2020 by 0.2%, with positive contributions from manufacturing, electricity and gas, and water and waste, partially offset by a negative contribution from mining and quarrying (Figure 7).
Production output during December 2020 continued to be affected by the coronavirus (COVID-19) pandemic, and it was 3.6% below the level of February 2020, the last full month of “normal” operating conditions.
Production output increased for the eighth consecutive period, primarily because of continued growth from manufacturing since April 2020.
Figure 8 shows that as the first lockdown restrictions were eased, the manufacturing sector started to recover and displayed stronger than usual growth during May, June and July 2020. In contrast, the recovery during August to December 2020 continued at a slower pace, despite a comparatively limited number of lockdown restrictions impacting manufacturing output.
Additionally, there has been a strong decline in mining and quarrying output since June 2020, which placed a drag on growth in production and contributed in part to a slowdown in the recovery over recent periods.
Manufacturing output grew during December 2020 by 0.3%, with 8 of the 13 sub-sectors displaying upward contributions. This was led by a strong upward contribution from chemicals and chemical products (Figure 9). In contrast, lower demand for alcoholic beverages from the hospitality sector was responsible for a strong negative contribution from food products, beverages and tobacco. This placed a drag on manufacturing growth during December 2020.
Despite being the eighth consecutive monthly growth since April 2020, manufacturing output was 3.4% below the level of February 2020.
When analysing growth across manufacturing for current price seasonally adjusted export and domestic turnover, there was a stronger decline in export turnover compared with domestic turnover during March 2020. This was mainly because of the significant worldwide impact on supply chains. This was followed by varied rates of recovery from May to July 2020, following the re-opening of UK and worldwide supply chains amid the easing of lockdown restrictions (Figure 10).
During December 2020, export strength continued but there was a stronger pick-up in growth in domestic business. This followed stronger export growth during November 2020, when we received some anecdotal evidence that some businesses had been stockpiling, in advance of the UK’s transition period with the European Union (EU) ending on 31 December 2020, although this evidence was not widespread.
Given the continued impact of the pandemic across production and manufacturing, we have highlighted the most interesting anecdotal evidence, both positive and negative, on sub-sector and industry-level growth during December 2020, with focus also given to the recovery to February 2020 levels
The food products industries were 2.2% weaker in December 2020 than in February 2020, with the other food products category (this includes sugar, tea and coffee processing, manufacture of prepared meals, condiments and seasonings) the hardest hit.
December 2020 saw output rise by 0.2% compared with November 2020, with negligible contributions to growth across all industries. The subdued nature of the growth across the sector is because of a variance in demand for food products, with upward contributions from meat and meat products, dairy products, and other food products. This was partially offset by downward contributions from bakery and farinaceous products, and grain mill products, and starches and other starch products.
Some businesses facing the hospitality sector have been negatively impacted as a result of tightened restrictions for services such as bars and restaurants across the UK.
Alcoholic beverages and soft drinks
There was a fall of 11.2% for this industry during December 2020. We received responder-led evidence that decreased output from both the alcoholic beverages and soft drinks industries was reflective of the continued downturn in demand from the hospitality sector, with tightened restrictions across the UK during the latter part of December 2020. This followed the strong decline during November 2020 because of the closure of hospitality across England.
Output was 27.1% weaker in December 2020 than in February 2020. Beyond the significant impact of the early months of the pandemic, when UK and worldwide supply chains were impacted, the longer-term decline is mainly distillery focused. Domestic sales for distillers performed strongly during 2019 but remained comparatively depressed during 2020 because of lower than usual demand from the hospitality sector. Additionally, there has been some pressure on exports because of higher tariffs imposed by the US, introduced in October 2019.
Figure 11 highlights the impact that reduced domestic demand and increased tariffs had on distillers. As restrictions were eased and supply chains reopened, export sales stabilised but remained weaker than the majority of 2019.
Wood and wood products except furniture
Following notable growth over recent months, the wood and wood products except furniture industry fell by 4.2% during December 2020, following a very high November 2020. The monthly decline may also be linked to the fall in construction output during December 2020.
Output was 6.4% above its February 2020 level, primarily because of increased demand from the construction sector amid the ongoing recovery and evidence of increased demand for DIY products as people spent more time making home improvements.
Chemicals and chemical products
The chemicals and chemical products sector displayed the strongest monthly growth since March 2020 and has strengthened to 14.5% above February 2020 levels.
Output rose by 5.5% during December 2020, led by a strong contribution from the other chemical products industry, which rose by 22.0%. Strength here came from activities associated with coronavirus (COVID-19) testing.
Basic pharmaceutical products
The monthly rise of 0.2% highlights the volatile nature of growth in the basic pharmaceutical products industry, following a fall of 2.5% during November 2020. Because of the volatility in monthly growth, output during December 2020 was only 0.2% above its February 2020 level.
Sector-level growth of 0.9% during December 2020 continued the recovery of transport equipment, but this should be noted in the context of output being 10.8% weaker than in February 2020.
Monthly strength was by an export-led rise from motor vehicles, trailers and semi-trailers. This industry displayed a rise of 0.7% and resulted in output at 4.4% above the February 2020 level. Additionally, the index is at its highest level since October 2019. However, this industry had declined prior to the pandemic, with output during December 2020 at 3.6% below the most recent peak in June 2019 (Figure 12).
The Society of Motor Manufacturers and Traders (SMMT) reported that during December 2020, the total number of cars manufactured were only marginally below December 2019. However, year-to-date output for 2020 was 29.3% weaker compared with 2019.
The air, spacecraft and related machinery industry rose by 0.8% during December 2020, but output was 37.4% weaker than in February 2020. As a result of the widely reported negative impact on global civil aviation, manufacturers facing this sector have been severely affected. Continued uncertainty over worldwide travel and quarantine restrictions has impacted passenger numbers throughout the pandemic.
Mining and quarrying
Sector-level growth fell by 0.9% during December 2020, driven by a fall of 0.7% from oil and gas extraction. Note that this estimate is provisional based on lower than usual response, so may be subject to revision.
The decline in oil and gas extraction over recent periods is because of a slump in oil prices earlier in the pandemic, amid tightened restrictions impacting on demand. This has resulted in output at 13.8% below its February 2020 level (Figure 13).
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Monthly construction output decreased by 2.9% in December 2020 compared with November 2020, falling to £13,516 million. This was because of falls of 3.8% in new work and 1.5% in repair and maintenance. This is the first decline in monthly growth since April 2020 when it fell by a record 40.7% and took the level of construction output to the lowest level since August 2020 when it was £13,181 million.Back to table of contents
The Monthly Business Survey (MBS) is the primary data source for 75% of production industries and 50% of services industries. This is an online questionnaire where businesses are asked to provide their turnover and, if they are within manufacturing, export turnover.
Response by turnover for services industries in December 2020 was 75.2%, down on the 81.3% achieved in December 2019 (see Historical MBS (services) response rates).
Response by turnover for production industries was 73.5% in December 2020, down on the 80.2% achieved in December 2019 (see MBS (production) response rates).
The response by turnover for the construction industries for December 2020 was 68.7% (see the Construction output in Great Britain: December 2020 release). This is partially because data collection for the MBS for construction and allied trades has been transitioning to an online questionnaire since April 2020.
Other data sources
Other data are primarily sourced from the Office for National Statistics (ONS) (for example, government expenditure, household expenditure and financial corporations expenditure) but also other bodies such as the Department for Transport, the Civil Aviation Authority and the Department for Business, Energy and Industrial Strategy. These account for 50% of services industries and 25% of production industries. We are also able to gain information from these data providers regarding monthly changes in their data.
We also use the fortnightly Business Impact of Coronavirus (COVID-19) Survey (BICS) as part of our quality assurance and validation process.Back to table of contents
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