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ECONOMIC DATA THIS WEEK

UK Production Data, 2018 revised:  The Office for National Statistics collects what we refer to as “production” data under the system known as ProdCom.  The figures are actually for the sales of UK made goods, so it is production net of stock changes held by the manufacturer, but we keep the short-hand title for ease of reference.

These showed that production of machinery across the 4 key end-user industries that we track was worth £138.9 billion in 2018, a fall of -1.4% compared to 2017.  Both the Automotive (-2.9%) and Aerospace (-9.6%) industries shared in this decline - the latter of these is an area where the distinction between what is made and what is sold is important - but there was an increase in sales of the Metal Products (+1.7%) and Industrial Machinery (+6.3%) industries.  Taken together, these 4 industries accounted for over 35% of total manufacturing production in 2018.

Adding in other industries such as basic metals, electrical and electronic engineering and repair and installation activity takes the share for Engineering more broadly up to 45% of total manufacturing.  This group was worth £176.8 billion in 2018, a reduction of -0.6% compared to 2017.

Members will be interested to know that sales of UK made goods in the “Machining” industry - effectively components made by metal cutting processes such as turning and milling - was worth £5 billion in 2018;  this is nearly -7% lower than in 2017.  The equivalent category for items made by metal forming processes such as forging, pressing and stamping was worth £2 billion in 2018, down by -1% on the previous year.

We are still crunching through the numbers for the machine tool, cutting tools and metrology industries that feature in Basic Facts - an update to those tables will be available in the next couple of weeks.

European GDP, 3rd Quarter 2019:  The latest update from Eurostat shows that GDP in the Euro-zone increased by +0.2% compared to the previous quarter, with the annualized rate (the comparison with a year earlier) at +1.2%;  both of these figures are unchanged from the previous estimate.  For the EU28 as a whole, the quarter-on-quarter rate was +0.3%, also unchanged from the previous estimate, but the annualized rate has edged up to +1.4% as a result of some revisions to data for earlier in 2019.

The individual country figures show growth on both comparisons in all 25 of the Member States which have published their figures for the 3rd quarter.  On the annualized basis, the fastest growing economies were Hungary (+4.8%), Estonia and Poland (both +4.1%) with Italy (+0.3%) and Germany (+0.5%) having the slowest growth.

The Eurostat News Release is available to download on their web-site at https://ec.europa.eu/eurostat/news/news-releases or it can be requested from MTA.

CECIMO Economic & Statistical Toolbox, 2nd Quarter 2019:  The latest edition of the CECIMO Toolbox rounds up various data series up to the end of the 2nd quarter.  As previously, these are grouped into 5 themes - Historical data, Demand, Investment, Business Climate and General Indicators – each of which has relevant charts accompanied by short commentary notes for each series within these headings.

Among the headlines in this edition is a significant drop in machine tool orders with both domestic and foreign business sharply lower than in the 2nd period of 2018.  However, this trend is not confined to Europe, with orders also down in Asia and the USA.  Machine tool exports from the 15 countries within CECIMO were also lower than a year earlier despite an increase compared to the 1st quarter of 2019.

Investment in the economy and manufacturing sectors of Europe continues to grow, although at a slower pace than before and there was a fall in capacity utilisation rates in the latest figures.  The general business climate is worsening around the world and the global PMI for manufacturing was below 50 in July 2019.

The CECIMO Toolbox can be downloaded from their web-site at https://www.cecimo.eu/economic-data/toolbox/ or e-mail Geoff Noon at MTA (gnoon@mta.org.uk) and we can send you a copy.

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 can 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.