Monthly economic brief: August 2020

Business Activity

Business activity has started to stabilise in July as lockdown restrictions have continued to gradually ease and businesses have resumed operations.

Proportion of business trading

• Lockdown restrictions required many businesses to close or scale down activity in March, however the gradual easing of lockdown restrictions since the end of May, has enabled many businesses to plan for and restart business activity across manufacturing, construction and large parts of the services sector.
• In the second half of July, 5% of businesses in Scotland reported that they were temporarily closed (UK: 6%) and 94% reported that they were currently trading (UK: 94%).^[2]
• The proportion of businesses reporting being temporarily closed has fallen from 12% in the second half of June and 18% in the second half of May as lockdown restrictions have gradually eased. Latest data show that of the 94% of businesses in Scotland that were trading, 5% had restarted within the previous two weeks.
• Further restarting of business activity was signalled with 2% of businesses in Scotland reporting that they were paused trading but intending to restart in the first half of August. However 3% reported that they did not intent to restart over the period.

Figure Description

This chart displays the trading status of businesses in the period 13 to 26 July by UK Country. Over the period 13 to 26 July, the percentage of businesses trading was 94 percent across all UK countries.

Business activity

• The RBS Purchasing Managers Index (PMI)^[3] showed that business activity in Scotland fell for the fifth consecutive month in July (49.3).^[4] However, the fall was marginal and activity has strengthened every month since the low point in April (10.7) signalling that business activity in
• Scotland is stabilising.
• At a sector level, manufacturing activity grew over the month (57.6) while services sector activity continued to fall (47.5) though to a notably lesser extent than in June. The improvement in activity over the month was supported by further stabilisation in new business (49.6), with new manufacturing orders rising over the month.
• This suggests the easing of lockdown restrictions has started to lead to an improvement in demand conditions with the more rapid rebound in manufacturing activity likely reflecting in part the more gradual pace at which restrictions have needed to ease across consumer facing services industries.

Figure Description

This chart shows the Net Balance scores of Scottish business activity by sector (Manufacturing, Services and Composite) between October 2019 and July 2020.

Trade

• On the back of significant global trade headwinds in 2019 and Brexit uncertainty, many businesses have faced further trade disruption in 2020 due to the pandemic and lockdown measures across countries.
• The value of Scotland's goods exports in April 2020 (compared to April 2019) declined by 32% (UK: -31%), while the value of imports fell by 22% over the same period (UK: -32%).^[5]
• More recent data on Scottish ports activity (non-EU trade only) up to May 2020 shows further falls in trade activity, with activity falling since the start of the pandemic.
• In May, the value of non-EU exports leaving Scottish ports (£345 million) was down 51% compared with May 2019, while non-EU imports entering Scottish ports (£451 million) was down 45% over the year.^[6]
• ONS data^[7] suggests that subdued trade activity continued into the second half of July with 44% of Scottish trading exporters reporting that they were exporting less than normal and 41% of Scottish importers. This was broadly in line with the UK as a whole (43% of exporters and 36% of importers).

Figure Description

This chart shows the monthly value of Scotland’s trade in goods for both imports and exports for the period January 2019 to April 2020. In April 2020, the monthly value of total imports to Scotland were £1.5 billion and total exports from Scotland were £1.9 billion.

Figure Description

This chart shows the monthly value of Non-EU trade in goods at Scottish ports for both imports and exports covering the period January 2019 to May 2020.

Figure Description

This chart reports on the impact of COVID-19 on Scottish businesses exports and imports. It shows the percentages of businesses reporting exports are ‘more than normal’(4%), ‘less than normal’(44%), ‘not affected’(43%) and ‘not sure’(8%) and the percentages of businesses reporting imports were ‘more than normal’ (4%), ‘less than normal’ (41%), ‘not affected’ (49%) and ‘not sure’(5%).