In Focus Commercial Credit
Some positive signs in challenging times
Manufacturers outperform other sectors, amid better growth expectations for 2021
Jeavon Lolay Head of economics and market insight, Lloyds Bank Commercial Banking
Manufacturers helped push the UK’s economic recovery ahead of the global benchmark in December, according to our latest Recovery Tracker. The Tracker, compiled working with
IHS Markit, provides an insight into the shape and pace of the UK’s recovery following the huge disruption caused by Covid-19. The latest data was compiled between
4 and 21 December 2020, ahead of the introduction of tighter lockdown restrictions at the end of the month, which should impact January’s results in certain sectors such as hospitality and tourism. Eight of the 14 UK sectors monitored by
the Tracker were ahead of the global index in December, up from six in November. Firms in the manufacturing industry,
which posted a seven-month run of growth and helped slow falling UK GDP in November, were the biggest contributors
to output growth in the final month of the year.
Spike A spike in demand from overseas buyers ahead of the Brexit trade deadline pushed the output of the chemicals (63.2), household products (57.1) and beverages and food manufacturing (54.6) sectors ahead of their global counterparts in December. A reading above 50 signals output is
rising, while a reading below 50 indicates output is contracting. Meanwhile, transportation (56.9)
outstripped global performance by the largest margin in December. This was the sector’s first rise in activity
since July and its fastest growth for nearly two-and-a-half years. The performance was driven by the
lifting of national lockdown measures in early December and an end-of-year spike in demand for logistics services ahead of the Brexit trade deadline.
A spike in demand from overseas buyers ahead of the Brexit trade deadline pushed the output of the chemicals (63.2), household products (57.1) and beverages and food manufacturing (54.6) sectors ahead of their global counterparts in December
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Vaccine Looking at a measure of expected output volumes, 11 of the 14 sectors monitored by the Tracker anticipated stronger output growth than their global peers over the next 12 months during December, as the UK’s Covid-19 vaccination programme got underway.
Software The UK’s software services sector’s expectations for growth were strongest of all
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sectors and well ahead of the rest of the world in December, with a reading of 81.5 against the global benchmark of 70.9. Accounting for the positive outlook,
providers anticipate increased corporate investment in digital services to continue in 2021. A reading above 50 signals that
respondents expect output to rise in the next 12 months, while a reading below 50 indicates output is expected to contract.
Industrial goods The industrial goods sector (75.6) was among those furthest ahead of the global benchmark (66.2) in December. The expectation of increased investment
in industrial development and a positive outlook for the UK construction industry was behind the sector’s optimism for the next 12 months.
Chemicals Chemicals (64.7), transportation (62) and real estate (58) were the only UK sectors monitored by the Tracker with 2021 growth expectations behind the global benchmark in December. Chemicals producers commented on a
slowdown in demand after sales to overseas buyers spiked ahead of the agreement of a trade deal with the European Union. Transport and real estate businesses are
now anticipated another uncertain year for commercial property rentals and public transport, with many firms indicating employees will continue to
February 2021
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