WiredGov Newswire (news from other organisations)
Private sector activity falls at record pace for second month in a row
Private sector activity falls at record pace for second month in a row.
Private sector activity once again fell at the fastest pace on record in the quarter to June (-71% from -63% in May, the previous survey low) since the launch of the CBI Growth Indicator in October 2003.
The composite measure, based on 910 respondents (between 26 May and 15 June 2020), consisted of record declines in activity across every sector. The main driver of the deterioration from May was services activity (-80% from -68%), with further weakening seen in both business & professional services (-77% from -62%) and consumer services (-89% from -83%).
Manufacturing output (-57% from -54% in May 2020) and distribution sales (-57% from -54% in May 2020) also continued to decline heavily.
Looking ahead, survey respondents expect a slower (albeit still strong) pace of decline over the next quarter (-46%). The fall in activity is set to ease in manufacturing, business & professional services and consumer services particularly.
Supplementary COVID survey questions revealed:
- Activity is on average 63% lower relative to “normal” conditions (i.e. in the absence of a pandemic).
- Businesses have a number of concerns around fully re-opening. 74% of respondents believe a lack of demand will present operational challenges, whilst firms also expect challenges from staff absences due to school closures (37%), and transport difficulties (23%).
Alpesh Paleja, CBI Lead Economist, yesterday said:
“These figures show the full impact of coronavirus on the economy after three months of shutdown. However, there are signs that we’ve hit rock bottom, with firms expecting a slower fall in activity over the next three months.
“Clearly tackling the lack of customer and client demand will be critical to economic revival. Businesses have highlighted several ways in which the government can support them further: extending grant support schemes, widening business rates relief and further deferral of VAT payments.
“Despite challenges, most businesses believe remaining operational under social distancing is feasible. We now need continued cooperation between government, business and civil society to steer our economy towards a sustainable and long-lasting recovery.”
Supplementary COVID-19 specific questions:
- Respondents reported that, on average, output/sales/volumes were 63% lower than under normal trading conditions (i.e. in the absence of a pandemic).
- Most respondents reported themselves to be either completely operational, but with some operations offsite or staff working from home (44%). However, over a third were partially operational (35%), with some sites/production facilities closed. 9% of respondents reported that they are currently non-operational.
Government support measures and financing
- 82% of respondents reported that they are using the Coronavirus Job Retention Scheme (CJRS), making it the most widely used support scheme.
- Responses suggest 41% of staff have been furloughed (average across all respondents).
- 60% of respondents said they are deferring VAT payments, whilst 26% are benefitting from business rates relief. 14% are using the CBILS schemes, 11% are using bounce-back loans and 10% have received some form of cash grant.
- While 28% of respondents reported the funding/liquidity needs of their business as sufficiently met, many also highlighted the need for further support. 47% called for an extension of business rates relief to all businesses, 32% have called for further grants and 29% would like other tax holidays.
Restarting the economy
- 74% of respondents cited lack of customer or client base demand as a challenge in restarting business operations.
- Firms are also concerned about staff absences due to school closures (37%), transport difficulties (23%) and illness (15%).
- On average, only 35% of staff could feasibly work from home on a regular basis, with minimal disruption to business operations. The proportion is higher for services (46%) and lower for manufacturing (16%) and distribution (19%).
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