Bank of England Agents' Summary of Business Conditions - 2020 Q3: The headline from the Bank of England Monetary Policy Committee meeting this week was their warning that the rising rate of coronavirus infections and a lack of clarity over the UK's future trade relationship with the EU could threaten the economic recovery. While they noted that much of output lost during lockdown had been recovered, the outlook remained "unusually uncertain". Citing this uncertainty, the Bank held interest rates at 0.1% and added that it would continue its monetary support for the economy but stopped short of increasing its bond-buying programme.
In conjunction with the meeting, the Bank’s Agents report noted that while most manufacturing companies had resumed production, activity is still weak in some sectors and many were operating below capacity in order to maintain social distancing and in response to subdued demand. Contacts in the aviation sector were reporting demand well below normal levels with a knock-on impact on the aerospace manufacturing sector. Similarly, while automotive manufacturing (especially for electric vehicles) has picked up, the supply chain is reporting demand from the sector has remained very weak. One positive area is that demand from the construction sector has recovered.
A growing number of manufacturing contacts that trade with the European Union expressed concern about the arrangements for the end of the transition period. A few companies said they were seeking to onshore supply chains to limit disruption. This is having a knock-on effect on investment with widespread reports of investment being cancelled or postponed due to uncertainty, especially in the aviation, automotive and oil and gas industries - three key areas for MTA members.
You can get more details on the Agent’s report from the Bank of England web-site at https://www.bankofengland.co.uk/agents-summary/2020/2020-q3.
European Industrial Production, July 2020: The economic recovery continued in July with Eurostat reporting that total industrial production in both the Euro-zone and the EU as a whole was +4.1% higher than in June 2020; however, compared to July 2019, Euro-zone output was down by -7.7% with the equivalent figure for the EU coming in at -7.3%.
At the sub-sector level, capital goods output increased the fastest in both areas with growth compared to the previous month of +5.3% for the Euro-zone and +5.6% for the EU. In part, this is because this sub-sector had the largest falls during the Covid-19 crisis as illustrated by the comparison with output levels a year earlier in July 2019 which shows a fall of -10.4% for the Euro-zone and -10.2% for the EU.
Sticking with the comparison with 12 months ago, only Ireland (+15.6%), Poland (+0.9%) and Latvia (+0.1%) saw total industrial output increase. The other 21 Member States that have published their July 2019 figures (three are missing) were all negative with the largest reductions in Denmark (-13.6%), Germany (-11.6%) and Portugal (-9.6%).
The Eurostat News Release, which also includes data on employment, can be downloaded from their web-site at https://ec.europa.eu/eurostat/news/news-releases (14 September) or you can request it from the MTA.
USMTO and CTMR, July 2020: The US Manufacturing Technology Orders (USMTO) programme tracks orders in the US market, based on the reports from participants. The first seven months of 2020 have orders running at -25% lower than in the same period (January to July inclusive) in 2019. Although this sounds like a bad number, it is the slowest year-to-date fall in orders since the February and suggest that at least the Covid-19 impact may be levelling off, if not improving slightly. However, the 12-month rolling trend fell by -26% and it has been running at more than -20% all year - the 12-month rolling total value of orders is now below the previous trough in July 2016.
The regional breakdown of the data shows all six regions in double digit negative territory for the year-to-date trend, although only just so in the case of the South-East region (-10%). The worst affected areas are the North-Central-West (-35%) and the South-Central (-40%). There is also a different trends by technology with metal cutting orders in the first seven months down by -24% while metal forming and fabricating is down by -54% compared, in both cases, to January to July 2019.
The US Cutting Tool Market Report (CTMR) runs in parallel and tracks orders for tooling. In the first seven months of 2020, tooling consumption is down by -21% compared to January to July 2019 and the 12-month rolling trend has slipped by -15% and by value, is at its lowest level since September 2017. There is no regional breakdown in this report.
You can download the press releases for the two surveys from the AMT web-site at www.amtonline.org, with the CTMR release also 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.
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-selective-assistance/overview. They produce a report that includes accepted offers and payments made and the editions for both the 4th quarter of 2019 and the 1st quarter of 2020 have just been made available to download at https://www.scottish-enterprise.com/our-organisation/accessing-our-information or they are 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.