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ECONOMIC DATA THIS WEEK

European GDP, 4th Quarter 2019:  Eurostat published an update to its preliminary flash estimate which confirmed that quarter-on-quarter growth was +0.1% for both the Euro-zone and the EU27.  It also confirmed that GDP growth in 2019 was +1.2% for the Euro-zone and +1.4% for the EU27.

However, this release does bring data for a number of the individual countries;  this shows that, compared to Q3-19, the economies of Finland (-0.4%), Italy (-0.3%) and France (-0.1%) contracted, while Germany was unchanged (as was the UK).  With no countries seeing a contraction in the previous quarter, we are not yet in a recession situation, but clearly, those in negative territory or at zero could well be reporting this when we get the data for the start of 2020 in mid-May.

Unfortunately, the Eurostat news release does not give the total annual trends at a country level but comparing the 4th quarter of 2019 with the same period a year earlier, the Italian economy was flat, Germany only grew by +0.5% and France was at just +0.8%.

The Eurostat News Release can be downloaded from their web-site at www. http://ec.europa.eu/eurostat (14 February) or requested from MTA.

Machine Tool Market data in Germany and Italy:  Our colleagues at VDW have released some preliminary figures for the machine tool business in Germany last year;  this shows that production was worth €12.5 billion, a fall of -1% on the 2018 total.  However, with exports down by -10% (to €8.2 billion), the domestic market saw an increase in German built equipment which led to consumption of machine tools growing by +8% to €7.15 billion despite a fall in imports of -9% (€2.8 billion).

We have also received initial estimates for Italy from UCIMU which shows a fall of -5% in production to €5.8 billion, while consumption of machine tools fell by -9% compared to 2018 to €3.9 billion.  Most of this came from a fall of -10% in machine tool imports (€1.4 billion) although domestic supply also fell as exports were only down by -2% (to €3.35 billion).

UK Trade, 4th Quarter 2019:  Alongside the GDP figures published last week, the Office for National Statistics (ONS) also released the headline trade data.  This continues to be complicated by trade in precious metals, including non-monetary gold;  this is gold bullion not owned by central banks and most of the world’s trade in this flows through the London markets and has a large impact on the trade data.  As a result of these distortions, the ONS now quotes data excluding precious metals and we will use these in this report on the quarterly data.

The trade deficit narrowed in the 4th quarter;  both exports and imports were lower than in the 3rd period of the year but with exports down by £1.7 billion and imports falling by £2.8 billion, the deficit also fell.  The fall in exports was led by fuels, chemicals (both down by £0.5 billion) and machinery & transport equipment (down by £0.4 billion), while the latter category was the main driver of the fall in imports, having been £2.2 billion less than in the 3rd quarter.

The narrowing of the trade deficit was mainly vis-à-vis the European Union, driven in turn by a fall in imports (of £1.2 billion) while exports were only down marginally (£0.1 billion).  The trade deficit with the rest of the world widened a little because the value of exports (£1.8 billion) declined by slightly more than the value of imports (£1.7 billion).

For 2019 as a whole, the ONS data includes precious metals.  As a result, the trade deficit narrowed compared to 2018 with exports increasing by £22.4 billion while imports only grew by £12.7 billion.  The increase in goods exports was mostly in unspecified goods (which includes precious metals) and miscellaneous manufactures but the ONS do note that an increase of £3.5 billion in imports of machinery and transport equipment was a significant parts of the growth in arrivals in 2019.

There are more details in the ONS Statistical Bulletin which you can download from their web-site at https://www.ons.gov.uk/releasecalendar (11 February) or request from MTA.

UK Productivity, 4th Quarter 2019:  With publication of the UK labour market data this week, the ONS has released its flash estimate of UK productivity.  This shows that, measured on the basis of output per hour, productivity across the whole economy grew by +0.3% compared to the 4th quarter of 2018.  However, output per worker was unchanged.

This modest improvement was because gross value added (output) rose more quickly then the number of hours worked.  The latter trend came as a result of an increase in employment rather than the average hours per employee - hence the flat trend for output per worker.

Although this release does not contain a breakdown by sector (so we don’t have the figures specifically for manufacturing), there are more details in the ONS Statistical Bulletin which you can download from their web-site at https://www.ons.gov.uk/releasecalendar (18 February) or request from MTA.

UK Machine Tool Exports/Imports in 2019:  Work is still in hand on other aspects of the manufacturing technology sector in preparation for the new edition of our Basic Facts booklet but we have the figures for machine tools.  Total exports increased by +5½% compared to 2018 with the value of £525.7 million the highest total since 1998.  Total imports were only fractionally higher than in 2018 at £591.1 million.

For exports, there was only a marginal increase in deliveries to the European Union, although at £267.5 million, this region still accounted for just over half of the total.  The rise in exports came from the rest of the world and included increases compared to 2018 of +44% in deliveries to China, +76% for Mexico and +247% for Thailand, although exports to the USA were -12% lower than the previous year.

Imports from the EU were fractionally higher than in 2019 at £324.3 million and accounted for 55% of the total;  this was almost balanced by a similarly small fall in arrivals from the rest of the world.  Despite this, we do see some clear changes at the country level with machine tool imports from Japan (+17%), China (+25%) and Turkey (+40%) all increasing while arrivals from the USA (-12%), Taiwan (-16%) and South Korea (-8%) fell.