With the worst recession predicted since the early 18th century, soaring public and private sector debt, millions of job losses and a predicted 35% fall in GDP for Q2, the UK is facing an unprecedented task in getting all sectors of the economy back on track.
The Office for Budget Responsibility recently published some very insightful, but worrying statistics on the impact Covid-19 may have on the UK economy (you can view the full report here), which can be seen from the chart below. But is it all necessarily doom and gloom?
The markets may have rebounded strongly from their end of March lows, but I thought it would be interesting to assess how each of the 10 main economic sectors have performed and how Covid-19 has changed sector dynamics in the UK. This article will take a look at the strength of the sectors going into the crisis, how each sector has performed under the current circumstances and decipher some of the economic data that has been published on the sectoral impacts of the Covid-19 pandemic.
Performance prior to Covid-19
Stock markets around the world continued their impressive performances in 2019 and the UK was no exception. Despite the political turmoil and looming Brexit uncertainty, the FTSE 100 gained 12% and the FTSE All Share 14.95% over the calendar year from January 2019 to January 2020. Though this was not as impressive as some of its international peers, it meant that UK valuations were perhaps not as stretched going into the Covid-19 pandemic.
To illustrate the performances of the 10 economic sectors prior to the pandemic, I have used the FTSE All Share sector benchmarks for 2019. The FTSE All Share sector benchmarks are defined slightly differently from the Thomson Reuters Business Classifications.
For example, the Consumer Goods benchmark is more representative of the Consumer Defensives sectors, whereas Consumer Services are more associated with Consumer Cyclicals. The Oil & Gas sector is used to represent the Energy sector. Though the benchmarks and their constituents slightly differ, they still provide useful insights into the performance of the 10 economic sectors.
The chart of the 10 sector benchmarks may be hard to read but it the…
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