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Monetary Policy Report – August 2020

Firms experienced a varied recovery in output following a significant easing of lockdown measures
throughout June and July.

Agency intelligence gathered since late June indicates that economic activity is recovering across an increasing range of sectors as social distancing measures have been eased further. However, persistent caution has dampened the outlook, particularly for sectors reliant on consumer footfall. For instance, those restaurants and pubs that have reopened have often reported severely depressed sales compared to normal, even when reduced capacities due to social distancing measures are taken into account. Sectors involving social interaction have generally been severelyimpacted by the pandemic, and demand growth has not increased in line with expectations. In contrast, retailers of non-food goods reported that aggregate customer spending combining online and stores sales is now close to normal levels compared with a year ago.

Continued strong growth in online sales compensated for depressed in-store activity. Taken together, sales of consumer goods and services in aggregate have only partially recovered as more sectors have reopened.

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