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ECONOMIC DATA THIS WEEK

UK Automotive Industry Output, 2019:  While we have a couple of weeks to wait for the first “full-year” data from the ONS, the Society of Motor Manufacturers & Traders (SMMT) has published its figures for December and, therefore, the whole of 2019.  This data is based on units rather than the values used by the ONS but does give us an early snapshot of the industry last year.

Comparing 2019 with 2018, output of cars fell by -14%, output of commercial vehicles decreased by -8% and the number of engines produced was -7% lower.

Looking at these categories in more detail, 81% of cars manufactured in the UK were exported;  however, the total of just over 1 million is the lowest since 2010.  Over half of the finished cars exported from the UK in 2019 went to the rest of the European Union, with the USA as the next largest market, accounting for a little under 20%.  The Nissan Qashqai was number 1 in the list of cars produced for export in 2019, followed by the Mini and the Toyota Corolla.  However, at the company level, Jaguar Land Rover was the largest manufacturer, followed by Nissan and Mini.

Production of commercial vehicles in 2019 was back at the 2017 level, with vehicles supplied to the home market down by -7% compared to 2018 and the number exported falling by -8%.  However, SMMT notes that the 2019 figure was distorted by model changes during the year.  Nearly all (95%) of the exported commercial vehicles go to the European Union, although the overall export ratio is lower than for cars at 59%.

Engine production in the UK fell to just over 2½ million which is its lowest figure since 2015.  With the fall in UK car production at -14% it is something of a positive that engines made for the home market were only down by -9% - in unit number terms, car production fell by more than 200,000 but engines made for the home market were down by less than 100,000.  Exports of UK made engines fell by 6% compared to 2018.

You can get more details, especially for cars, from the SMMT web-site at https://www.smmt.co.uk/category/news/manufacturing/ or request this from MTA - we can also send you a file with the historical data back to 2015.

USMTO and US CTMR, November 2018:  The USMTO - US Manufacturing Technology Orders - programme tracks orders in the US market, based on the reports from participants.  Manufacturing technology orders declined by -18.6% in the first eleven months of 2019 compared to the same period in 2018;  the trend for the rolling 12-month total was -18.4%, its worst rate since January 2016.

There is some mitigation of this in that 2018 was a very good year for the US market and AMT note that, despite a decline of around 20% which has been expected for most of the year, the current dollar values are healthy when set against the average for the past decade.  There is also a hangover effect from the tax reform that was introduced in 2017 which they suggest has smoothed investments and eliminated the year-end rush to place orders.

Because of some data confidentiality issues at the regional level, we don’t have all of the regional totals;  however, these are all published for metal cutting machines which cover a majority of the market covered by the USMTO.  Analysis of this shows all six regions with double-digit negative reductions in orders for the November year-to-date trend - these range from -11% in the North-Central-East and -12% in the West to -28% in the South-Central and North-Central-West areas.

The US Cutting Tool Market Report (CTMR) runs in parallel and tracks orders for tooling.  Comparing the first eleven months of 2019 with the same months (January to November) in 2018, the market contracted by -1.1% and the 12-month rolling trend is down by -0.4%.  This is the first time since April 2017 that the 12-month rolling trend has fallen.  There is no regional breakdown in this report.

You can download the press release for the USMTO from the AMT web-site at www.amtonline.org, with the CTMR release published on the USCTI web-site at www.uscti.com;  alternatively, you can request either or both releases from MTA and we can make sure you get them when they are published each month.

European Commission Economic Sentiment Indicator and Capacity Utilisation, January 2020:  The European Commission (EC) draws from a range of surveys to construct confidence indicators for six sectors of the economy and then uses five of these (financial services is not used) make up its Economic Sentiment Indicator (ESI).  This showed a significant improvement for both the Euro-zone and the EU28 in January - however, note that the data collection period for most of this data ended mid-month at best.

In the Euro-zone, there was a marked increase in confidence for the industry and construction sectors, consumers and the service sector were broadly flat and retailers were less confident - the financial services sector also saw an improvement.  Within the industrial sector, respondents to the surveys took a more optimistic view about expectations for output over the coming 3 months, stocks of finished products and the current level of total orders books.  Although not included in calculating the confidence indicator, their views on production levels over the past 3 months and export order books also improved.

There was a similar pattern in the EU28 data.  This saw a stronger improvement in the overall ESI because the UK - up to now the largest non-Euro economy in the EU - had a strong improvement in sentiment (although not, as we noted last week in reporting the CBI survey which is a component of the ESI, necessarily in the more data based questions) and this was only partly offset by a weaker outlook in Poland.

This was one of the quarterly surveys that covers additional indicators, including the figures for capacity utilisation.  Following three quarters with a reduction in capacity utilisation, the indicator levelled off in the Euro-zone;  the pattern for the EU28 has been slightly different but the latest reading showed a small fall.  In both cases, the capacity utilisation indicator is below its long-run average (back to 1985), but just above the level for the past decade.  Among the major economies in Europe there was mostly only a small change in the latest data, but a mix of rises and falls;  Spain, which had a modestly significant increase in capacity utilisation and the UK which saw the opposite trend were the main exceptions.

You can download the EC report from their web-site at https://ec.europa.eu/info/business-economy-euro/indicators-statistics/ec... or you can request it from MTA. 

Investment Grants in Scotland:  The Scottish Government still uses a grant based system for supporting investment - Regional Selective Assistance (RSA);  details of this scheme are available at http://www.scottish-enterprise.com/services/attract-investment/regional-... produce a report that includes accepted offers and payments made and the edition for the 3rd quarter of 2019 can be downloaded at https://www.scottish-enterprise.com/our-organisation/accessing-our-infor... or is available on request from MTA (we can also add you to a mailing list to receive these reports as they become available).  Although these grants cover the whole economy, you might find some new contacts among those companies who have recently received grants.