European Industrial Production, September 2020: Data published by Eurostat shows that industrial production in the Euro-zone fell by -0.4% compared to the previous month (August 2020) but was unchanged across the EU as a whole. Compared to a year earlier in September 2019, total industrial production fell by -6.8% in the Euro-zone and by -5.8% for the EU.
In the month-on-month data, output of capital goods increased by +0.6% in the Euro-zone and by +1.2% for the EU but as a result of the impact of the coronavirus being strongest on this sub-sector, capital goods has seen the largest reductions compared to a year ago with declines of -13.3% for the Euro-zone and -11.9% in the EU.
Focusing on the trend compared to September 2019, total industrial production in 22 of the 24 Member States to have published the data. The largest falls were in Ireland (-13.6%), Germany (-8.7%), France and Netherlands (both -6.1%), while the exceptions to the general downward trend were Poland (+3.3%) and Portugal (+2.5%).
The Eurostat News Release can be downloaded from their web-site at www. http://ec.europa.eu/eurostat (12 November) or requested from MTA.
European GDP, 3rd Quarter 2020: Following the release of the preliminary estimates that we covered last week, Eurostat has now issued its flash estimates for GDP which includes data for some more individual countries. At the regional level, growth in GDP for the Euro-zone has been revised down fractionally to +12.6% compared to the previous quarter with a correspondingly minor revision to the trend compared to a year earlier of -4.4%.
The weaker revisions for the EU are a little larger with quarter-on-quarter growth now standing at +11.6% (+12.1% in the preliminary figures) and the economy -4.3% (revised from -3.9% in previously) lower than a year earlier.
Among the 20 Member States who have published the data for the 3rd quarter, all of them saw growth in this period, ranging from +18.2% in France, +16.7% for Spain and +16.1% in Italy down to just +2.6% in Finland and +3.7% in Lithuania. This signals an end to the recession in those countries who had two negative quarters - there was still some growth in the 1st quarter in Bulgaria and Sweden, with Lithuania and Romania flat so, by definition, they did not have a recession in the current crisis.
The Eurostat News Release can be downloaded from their web-site at www. http://ec.europa.eu/eurostat (13 November) or requested from MTA.
UK Productivity, 3rd Quarter 2020: In conjunction with the GDP data that we reported last week, the Office for National Statistics has published an analysis of productivity from the initial data. Measured in output per hour, labour productivity for the whole economy improved by +3.0% compared to a year ago but output per worker fell by -8.8% as furlough continues to affect this measure as people sustain their status as a worker but are not undertaking any hours. Because of this, the quarter-on-quarter figures both showed strong increases but they are not really meaningful.
The growth in output per hour improved because gross value added (GVA - a measure of output) recovered more strongly than total hours worked.
This release also has the data for output per hour for the main sectors of the economy. Concentrating on the comparison with a year ago, output per hour increased by +8.2% compared to a year ago in manufacturing, a trend that was only eclipsed by the construction sector (+9.3%); productivity in the service sector only improved by +1.3%. In all cases, this was because the hours worked fell by more than GVA.
There are more details in ONS Statistical Bulletin which can be download from their web-site at https://www.ons.gov.uk/releasecalendar (12 November) or you can request it from MTA.
UK Trade, 3rd Quarter 2020: Another part of the GDP data release from last week covers exports and imports. The headline data has been all over the place recently thanks to trade in special items, mostly non-monetary gold, which has distorted the real data trend. Taking this out, the UK total trade surplus fell by £3.4 billion compared to the previous period as imports grew more rapidly than exports.
In part, this was because the trade deficit in goods widened by £2.4 billion. Compared to the 2nd quarter, goods exports increased by £14.1 billion while imports grew by £16.6 billion. In both cases, the main increase was in the general category of “machinery and transport equipment” and, in particular, cars moving in both directions. Exports of road vehicles grew by £4.7 billion, with £1.7 billion of this in shipments to the EU and the remainder of the increase to the rest of the world but mainly concentrated in China and the USA. Road vehicle imports increased by £5.4 billion, partly reflecting a release of pent-up demand from the earlier lockdown but demand may have also increased in anticipation of a no-deal end to the Brexit transition period which would bring a 10% tariff on cars.
The trade deficit in goods increased with the EU but decreased with non-EU countries. In the 3rd quarter of 2020, exports to the EU accounted for 43% of the total which is down from a peak of 50% in the 1st quarter of 2019. For imports, the EU accounted for 53½% of the total – this is its highest share this year and not far short of the most recent peak of 56% in Q3-2015.
There is more detail of all this in the ONS Statistical Bulletin for UK trade in September (which completed the quarter) which can be download from their web-site at https://www.ons.gov.uk/releasecalendar (12 November) or you can request it from MTA
USMTO and CTMR, September 2020: The US Manufacturing Technology Orders (USMTO) programme tracks orders in the US market, based on the reports from participants. In the first three quarters of 2020, orders were running at -22% below the level of the same months in 2019 (January to September inclusive). It is worth noting that the September figure was the strongest month of the year so far, although still slightly behind the figure for a year earlier (Sep-19).
The regional breakdown of the data is only available at the total level for 3 of the 6 regions in the survey, but we can use the trends for metal cutting machines as a useful guide (this group accounted for over 97% of the total market tracked by the survey). All of the regions saw a fall in orders compared to the first nine months of 2019; these ranged from -35% in the South-Central area and -31% in the North-East down to -3% in the South-East - the latter is the only region not to experience double-digit declines in this period.
The US Cutting Tool Market Report (CTMR) tracks orders for tooling on a similar basis; in the first three quarters of 2020 cutting tool consumption is running at -23% lower than the level for January to September 2019 - this is broadly the same pace as in August. The monthly data for September is the strongest since March before ethe crisis really impacted in the US market. 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.