Soon after the pandemic began, Jonathan Athow wrote here about challenges the ONS would face in measuring its effect on the UK economy. Since then the first official data has revealed the scale of the immediate impact. As more data comes on stream, here he updates on the continuing work to ensure the ONS is able to paint the most accurate picture possible of these dramatic recent changes.
Over the last few weeks we have published a range of indicators, showing how the pandemic has affected jobs, prices and economic output. Our data shows “no part of the economy remains untouched by the impact of the virus” and the measures taken to help control its spread.
GDP saw a record fall in March; this was reflected in the labour market with a very big fall in hours worked in the last two weeks of March, although employment, overall, remained high with many people remaining in employment but on furlough leave, supported by the Coronavirus Job Retention Scheme (CJRS). The public sector finances showed the impact of this and other government interventions with Government borrowing in April almost as high as in the whole year before the virus hit.
We saw signs, though, of falling employment in April as new real-time tax data showed the number of employees on companies’ payrolls fell significantly. There were also unprecedented falls in retail sales. Price rises facing consumers slowed as the price of petrol fell in the face of decreasing demand and oversupply.
One of the challenges we face is some falls in our survey response rates. If the businesses who don’t respond are performing similarly to the ones that do, then our statistical methods can account for this with limited impact on our headline economic statistics. However, in the 2008 financial crisis we found those businesses who were not responding tended disproportionately to be those facing real financial difficulty or that had stopped trading. This meant our early estimates of GDP showed a better picture of the economy than the reality turned out to be.
Our new Business Impact of COVID-19 Survey (BICS) has already shown us that around one in four businesses has temporarily stopped trading. We know this provides some challenges for our data, and have taken a number of steps to ensure we can identify and adjust for any bias that non–responding businesses may introduce.
To help us understand the performance of businesses we are bringing the widest possible information together. This includes linking the results from our business surveys, a deep analysis of over 10,000 comments we have received from businesses on their operations and the use of administrative data available across government. We are also working with private sector partner glass.ai to read the home pages of more than half a million business websites to understand their trading status.
In addition, we have been using ‘live’ data on online job adverts from Adzuna to produce a weekly indicator of the number of vacancies across the economy. This is a key indicator of how the labour market is performing and supplements our existing employment surveys as well as helping us give a more ‘real time’ picture of the economy. This is another example of how the ONS has been working with businesses to mobilise the power of data for public benefit during the pandemic.
While there is more work to do, we have seen the early impact the pandemic is having on the economy and how the measures we have put in place have stood up to the challenges it has presented. We believe that the additional sources and checks we have implemented put us in a good place to provide more accurate early estimates than at previous economic turning points.