UK manufacturing exports hit an all-time low in the second quarter of 2020, according to the Lloyds Bank International Trade Index.
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Between April and June, the Trade Index hit a new low of 34.6 for new manufacturing exports, highlighting a decline from 46.8 in the first quarter of 2020. The decline in exports is the lowest since the financial crisis in 2009, when exports sat at 38.8.
The Trade Index reports readings under 50 as signalling a reduction in export orders, while readings above 50 indicates growth.
The vast majority (93%) of manufacturers reporting a downturn in overseas orders attribute it to the impact of Covid-19, stating it has resulted in shrinking demand, widespread business closures, and delays to export projects.
Basic metals and the automotive industry were hit the hardest, reflecting an overall fall in demand for manufacturing components and the shutdown of car production in Europe.
Industries across life sciences, such as exports of chemicals and plastics (41.1) , as well as pharmaceuticals and healthcare products fell at a slower rate compared to other manufacturing goods. These industries were helped forward purchasing as overseas buyers anticipated delivery delays of products.
By June however early signs of international demand have started to return, showing an increase in appetite for British consumer goods, according to the Trade Index. UK clothing and textiles, as well as other manufacturing goods such as sports and leisure equipment grew.
UK services firms saw the sharpest drop in new overseas work since the 2014, measuring 29.2 in Q2 down from 42.7 in Q1. The fall was mainly related to international travel restrictions.
As expected, sharp economic contraction in the majority of UK export markets, including the European Union and North America was also recorded. The global demand for British goods and services was noted at a record low of 35.2 in Q2.
China was the only UK export market to see an increase in Q2, sitting at 52.6 as the county’s lockdown measures were eased.
Gwynne Master, managing director and global head of trade for Lloyds Bank Global Transaction Banking, said: “The results demonstrate the full impact of the pandemic as swathes of the global trade markets shut down amid efforts to help contain the spread of the virus.
“Export measures hit an all-time low in Q2 although we see small signs of recovery as early as May and into June. While it is too early to talk about the trajectory of recovery, it is encouraging to see enhanced external demand, signs that China’s economy is stabilising, and some UK consumer goods’ export growth in June.
“Government schemes and finance options continue to be made readily available, which will help UK exporters continue to trade, to position for a return to normality to international trade, and to prepare now for potential future disruption.”