How is activity in the power sector recovering from Covid-19’s impact?

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Analysis of jobs, deals, stock prices, financial filings and news sentiments now show power to be a relative loser when it comes to Covid-19 recovery.

The power sector is now a relatively weak performer in the world economy, with sectoral activity only slightly above pre-pandemic levels in the first quarter of 2021, according to GlobalData.

In Q1 2021, activity levels in the sector were 8% higher than they were at the end of 2019, before the pandemic decimated economies across the world. This means that, of the 18 sectors included in the analysis, the power sector ranks 13th in terms of its latest value for Covid-19 activity recovery.

The healthcare sector saw the highest sector activity levels in Q1 2021 relative to the last quarter of 2019, with the technology, automotive and banking & payments sectors comprising the rest of the top four.

Two sectors – travel & tourism and oil & gas – are currently seeing activity levels lower than their pre-pandemic norms and have failed to see activity levels recover to pre-pandemic norms at any point during the past 15 months.

How has activity in the power sector recovered from Covid-19?

Sector activity index* across 18 industries, Q4 2019 = 100

GlobalData’s sector activity metric is a derived from several of the company’s research datasets. The composite index is composed using a combination of company level data on job advertisements, deals, stock prices and sentiment analysis across financial filings and news reports. It is a dynamic metric taking in millions of datapoints that can be used to track how strongly different sectors or industries are performing.

We can also delve into the component parts of the index to get a sense of exactly where companies from a given sector are over or underperforming. One of the more traditional measures of tracking performance is through the value of company stocks, which we’ve grouped together by industry to form a stocks performance index for each.

After a dip in spring 2020, the average sector has been performing above pre-pandemic levels since early August 2020. However, this varies significantly by sector.

Power stocks have performed worse than average

Stock price index* across 18 industries, Oct 2019 = 100

Power stocks generally underperformed the market in the past year. By 16 March 2021, stocks in these companies – as tracked by GlobalData – were 6.6% above their starting point in October 2019. Across all sectors the average was 33% higher.

Hiring levels are also useful in determining how confident a company is feeling about the months ahead. GlobalData’s jobs index tracks job openings across thousands of companies on a daily basis, allowing us to assess that confidence in real-time and gauge which sectors are feeling Covid-19’s impact the hardest.

The number of open job advertisements in power is currently at a higher level compared to most other industries, relative to their pre-pandemic norms. By 15 March 2021, the latest date for which data is available, hiring levels were 9.1% higher than those recorded prior to Covid-19’s impact. This means that the power ranks 10th out of the 18 sectors analysed when it comes to the recovery of hiring levels.

Hiring in the power sector has recovered

Jobs index* across 18 industries, Oct 2019 = 100

In addition to jobs and stocks, our composite index also factors deals into account, tracking mergers, acquisitions, private equity and venture capital deals on a daily basis. This, again, can be seen as a good indicator with which to gauge how ambitious companies are feeling, with a greater number of deals indicating a more optimistic outlook.

Relative to pre-pandemic levels, the volume of financial deals in power has been lower than that of most other industries over the past 15 months.

The volume of deals in the power sector is now lower than pre-pandemic

Deals index* across 18 industries, Oct 2019 = 100

By 17 March 2021, power deals were 0.7% lower than levels in September 2019. This places the sector in 11th position out of the 18 industries included in the analysis on current deal volume recovery.