The COVID-19 pandemic has created “an economic crisis like no other”, according to the latest Quarterly Economic Survey (QES) conducted by Greater Manchester Chamber of Commerce.
The GM Index, which is a combination of seven key QES measures, is at its lowest ever level (-31.7 compared with 31.9 in the first quarter of this year) – a drop of over 63 points. Not only is the GM index at its lowest level, this quarter has had the sharpest fall ever.
The QES results show dramatic reductions in domestic and international demand across all sectors. Business confidence is low, with 93% of respondents concerned about volume or revenue and 51% worried about capital and cash management. Only 10% of employers said they were trying to recruit staff, compared with 54% in the first quarter of this year.
Subrahmaniam Krishnan-Harihara, Head of Research at Greater Manchester Chamber of Commerce, said: “This is one of the most important Quarterly Economic Surveys of our lifetimes. The COVID-19 pandemic has created an economic crisis like no other, which cannot be compared to previous recessions.”
Despite low confidence and demand, the QES does reveal some positive news, with 50% now reporting a decrease in sales, compared with 74% in the first week of lockdown. Retail sales have also picked up in the last few weeks with internet sales, which made up 20% of sales before lockdown, now accounting for a third of total retail sales. In Greater Manchester, the crisis is likely to cause a GVA drop of between 12% – 14%. Nationally, the drop in monthly GDP was 20% in April. The subsequent economic damage could cut up to 10% of annual GDP.
Subrahmaniam added: “There is a lot of bad news in the survey, but there is some good news as well, especially in the last few days.
“The data suggests there will be a ‘tick-shaped’ recovery rather than a ‘V-shaped’ or ‘U-shaped’ recovery as suggested previously. This means we expect the recovery to be gradual and steady rather than a sharp upturn.
“With 200 non-essential stores opening in Manchester we are seeing an increase in retail sales. Consumers clearly do want to return to the shops, but the growth in internet sales will be of concern to the traditional High Street.”
The survey also helps in setting the broader economic context to help the Chamber’s work in looking at the real needs of business to start and sustain the recovery. Further work is being done with members to identify the key asks of business in these challenging times.