British economy continued to decline in May
US, WASHINGTON (ORDO NEWS) — The UK economy continued to decline in May, as the government blockade due to an outbreak of coronavirus persisted, reports Reuters.
It is also noted that the May decline in the British economy was weaker than in April.
The IHS Markit Procurement Managers Index (PMI) reached a record low in April, and the vast majority of companies reported that activity continued to decline in May, albeit to a lesser extent than immediately after the introduction of restrictive measures.
Chris Williamson, IHS Markit’s chief business economist, predicted that more businesses will report an increase in June due to the weakening of the blockage associated with the distribution of COVID-19.
“Nevertheless, the UK seems to see a disappointingly slow recovery, given the likely slower pace of the opening of the economy compared to other countries that have seen fewer cases of COVID-19,” he said.
A separate study by the Confederation of British Industry (CBI) showed that output was the lowest ever recorded since 1975 for three months to May.
“Production has fallen even more sharply as firms experience a collapse in demand and supply chain disruptions, leading some companies to temporarily close their plants,” said Anna Leach, CBI Deputy Chief Economist.
According to CBI, orders in May were the lowest since 1981. Expectations for the next three months have improved since April, but still indicated continued decline.
Earlier, the chief British budget forecaster said that in April there was probably a maximum decline, but the economy is unlikely to recover quickly.
IHS Markit said its composite index, which measures activity in the dominant services sector and manufacturing, rose to 28.9 points in May from 13.8 points in April, which was stronger than the forecast made by Reuters. PMI indices below 50 indicate a decrease in activity.
“No wonder the Bank of England is considering introducing negative rates,” said Elizabeth Martins, an economist at HSBC.
Bank of England chief Andrew Bailey said he was less opposed to negative interest rates than before the exacerbation of the coronavirus crisis.
IHS Markit reported a serious lack of new business. Although business expectations improved during the second month, companies said they were worried that the recovery would take a long time.
Employment declined again in May, although the decline was less rapid than in April.
A CBI survey found that 59% of manufacturers resorted to layoffs and 9% reported permanent layoffs.
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