The aerospace, defense and security sector is now one of the worst performers 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 5% 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 aerospace, defense and security sector ranks 15th 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 and tourism and oil and 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.
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 compoment 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.
Aerospace, defense and security stocks generally underperformed the market in the past year. By 16 March 2021, stocks in these companies – as tracked by GlobalData – were 9.2% 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 aerospace, defense and security is currently at a lower level compared to most other industries, relative to their pre-pandemic norms. By 15 March 2021, the latest date for which data are available, hiring levels were 11.2% lower than those recorded prior to Covid-19’s impact. This means that the aerospace, defense and security ranks 16th out of the 18 sectors analysed when it comes to the recovery of hiring levels.
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 guage 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 aerospace, defense and security has been higher than that of most other industries over the past 15 months.
By 17 March 2021, aerospace, defense and security deals were 32% higher than levels in September 2019. This places the sector in fourth position out of the 18 industries included in the analysis on current deal volume recovery.