Data from March has highlighted that the COVID-19 outbreak has already dealt the UK economy a more severe blow than at any time since comparable figures were first available over 20 years ago

The latest IHS Markit/ CIPS Flash UK Composite PMI was compiled between 12-20 March 2020.

The combined monthly decline in output across manufacturing and services exceeded that seen even at the height of the global financial crisis, with the IHS Markit/CIPS Flash Composite PMI falling almost 16 points since February 2020.

At 37.1 in March, down from 53.0 in February, the seasonally adjusted IHS Markit / CIPS Flash UK Composite Output Index – which is based on approximately 85% of usual monthly replies – signalled the fastest downturn in private sector business activity since the series began in January 1998. The prior low of 38.1 was seen in November 2008.

A rapid decline in business activity across the service economy led the overall downturn in March (index at 35.7) as emergency public health measures to halt the spread of coronavirus caused demand to slump.

Moreover, the latest PMI figures were compiled in advance of the UK government’s decision to order pubs, restaurants and other leisure businesses to close by midnight on 20th March.

Manufacturing production also dropped sharply during the latest survey period (index at 44.3), with the rate of decline the steepest since July 2012.

Other indicators pointed to similar signs of distress. New orders across the private sector as a whole fell at the sharpest Comment rate seen since December 2008. Business expectations for the year ahead meanwhile slumped to the lowest seen since data for this series was available in 2012 by a wide margin.

March data signalled a rapid change of direction for employment across the UK private sector amid escalating measures to fight the spread of coronavirus, highlighting the challenges faced by policymakers to help businesses and households through the current public health emergency. The flash PMI signalled a fall in employment across the manufacturing and services to an extent not seen since July 2009.

Chris Williamson, chief business economist at IHS Markit, said: “The surveys highlight how the COVID-19 outbreak has already dealt the UK economy an initial blow even greater than that seen at the height of the global financial crisis.

“With additional measures to contain the spread of the virus set to further paralyse large parts of the economy in coming months, such as business closures and potential lockdowns, a recession of a scale we have not seen in modern history is looking increasingly likely.

“Historical comparisons indicate that the March survey reading is consistent with GDP falling at a quarterly rate of 1.5-2.0%, a decline which is sufficiently large to push the economy into a contraction in the first quarter.

“However, this decline will likely be the tip of the iceberg and dwarfed by what we will see in the second quarter as further virus containment measures take their toll and the downturn escalates.

“Any growth was confined to small pockets of the economy such as food manufacturing, pharmaceuticals and healthcare. Demand elsewhere has collapsed, both for goods and services, as increasing numbers of households and businesses at home and abroad close their doors.”

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