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ECONOMIC DATA THIS WEEK

UK Index of Production, November 2014:  Data from the Office for National Statistics (ONS) showed a fall in both manufacturing output and total industrial production compared to October.  One significant factor in the data for industrial production was the mild weather at the end of last year - output of electricity and gas is included in industrial output and the warmer weather means that this is not increasing as it did at the same time last year.

However, we prefer to focus on 3-month moving trends;  on this basis, total manufacturing output was +0.5% higher than in the previous 3 months (June, July and August 2015), but was -0.6% lower than a year earlier (September, October and November 2014).  One particularly weak sector in November was pharmaceuticals, but this follows a very high figure in October, so is, perhaps, not quite the issue that the headline numbers suggest.

Output of the Capital Goods industries in the latest 3 months (September, October and November 2015) were +0.2% higher than in the previous 3 months, but was -1.9% lower than a year earlier.  However, this hides diverging trends among the key industries that we track.

On the negative side, there was another fall in output from the Machinery industry, with activity -1.5% down on the previous 3 months and -14.2% lower than in the same period a year earlier.  The other weak point is the Metal Products industry where output fell by -1.3% on the previous 3 months, although this is heavily influenced by what appears to have been a one-off peak in output in June (which is in the “previous 3 months” period);  compared to the same 3 months in 2014, output in this industry grew by +0.8%.

This provides a neat Segway into the positive news which continues to come from the Transport Equipment industries;  Automotive output fell a little in November, but from a very high figure in October and the overall trend for the latest 3 months is growth of +3.9% compared to the previous 3 months and +10.7% on a year earlier.  For the Aerospace industry, the trends are +1.1% and +8.9% respectively;  this industry had strong growth between October and November, but as with the Automotive data, this may be exaggerated by the seasonal adjustment.

You can download the ONS Statistical Bulletin from their web-site at www.ons.gov.uk or request it from MTA;  we also have an analysis of the key industries which is available to members - please contact Geoff Noon (gnoon@mta.org.uk).

European Industrial Production, November 2014:  Eurostat data is more focused on the individual months;  total industrial production in the Euro-zone was -0.7% lower than in October 2015, but +1.1% higher than in November 2014;  for the EU28 as a whole, the trends were -0.6% and +1.4% respectively.

The breakdown does not identify manufacturing as a whole - although the largest part of total industrial production, this also includes the output of utilities and the extraction industries - so we leap straight to the figures for capital goods.  Output of this sector in the euro-zone was -1.9% lower than in October, but +1.2% higher than in November last year;  for the EU28 as a whole, the month-on-moth fall was -1.3%, with capital goods output +2.0% up on a year earlier.

Among the 24 member states for whom the latest figures are published, total industrial production was higher than in November 2014 in 17 countries and lower in 7; the fastest growth was in Ireland (+14.2%) and Slovakia (+11.9%), with the largest reductions being in Netherlands (-8.0%) and Estonia (-6.2%)

You can download the Eurostat News Release from their web-site at http://ec.europa.eu/eurostat or request it from MTA.

European Business Climate Report, December 2014:  The latest Economic Sentiment Indicator, compiled by the European Commission (EC) from a range of surveys across the region improved slightly for the euro-zone and, more markedly, for the EU28 overall.

Improved sentiment in the euro-zone was driven by a higher level of confidence in industry which resulted from managers more optimistic expectations about production and, in particular, improved assessments of the current level of order books.  The stronger performance for the EU28 as a whole was down to improved readings in the UK which is the largest non-euro economy.

You can get the report from a link on the European Commission’s web-site at http://ec.europa.eu/economy_finance/db_indicators/surveys/index_en.htm or on request from MTA.

USMTO, November 2014:  The US Manufacturing Technology Orders (USMTO) programme tracks orders received in the US market, irrespective of origin;  in the first 11 months of 2015, orders are running -17.2% lower than in the same period last year (January to November 2014).  The numbers in this report are based on the totals of actual data reported by companies participating in the USMTO programme.

Looking at the regional breakdown, only the North-East area is in positive territory;  the other five regions saw falls, with the South-Central area seeing the largest reduction of -59.2%.

You can download the USMTO News Release AMT web-site at www.amtonline.org or request them from MTA.

BEAMA Contract Price Adjustment Service:  Do you have long-term contracts, either with customers or suppliers?  Have you thought about incorporating something in the contract that allows you to adjust the price according to changes in input costs?

On behalf of members, MTA subscribe to a service provided by our colleagues at BEAMA which gives a monthly track of key indices on labour and materials costs.  Of course, you need to get the principle and the relevant formulas included in the contract, but this gives you a way of updating the relevant prices independently.

If you would like more details on this, please contact Geoff Noon (gnoon@mta.org.uk) at MTA;  we will send you a copy of the latest report and some typical formulae and can have a discussion about whether or not this would be useful for you.