Bank of England’s Agents’ Summary of Business Conditions – Q1-2022:  In conjunction with the meeting of the Monetary Policy Committee (MPS) this week, at which they voted 8-1 to increase the Bank Rate to 0.75%, the Bank of England has published the latest summary of business conditions collected by their Agents around the country.  This round covers intelligence that was gathered by the Bank’s Agents mostly between mid-January and late February – before the invasion of Ukraine.

For manufacturing, shortages of goods and labour continued to hold back output growth and contacts were concerned that the war in Ukraine could lead to shortages of some tradable goods.  Despite this, manufacturing output had grown at a modest pace in the past three months (compared to a year earlier) and most contacts reported strong order books, led by food & drink, pharmaceuticals and chemicals, but with demand gradually recovering in the oil & gas and aerospace industries.

It was noted that the supply chain problems were mainly in the electronics and automotive industries.  While there were some signs of these problems easing, they are likely to remain a constraint until the 2nd half of 2022 and, in some cases, into 2023.  Although few companies reported direct trade links with Russia or Ukraine, the Agents noted that many companies have indirect exposure to them via supply chains.

One issue in this area is that both Russia and Ukraine supply raw materials needed in the manufacture of semi-conductors and a prolonged conflict is likely to have an impact in this area.  This is further complicated by Covid outbreaks in Asia, which is creating further production delays, most notably in the automotive industry.

Despite all this, investment intentions across the economy (there is no specific note for manufacturing in the report) improved in response to increased demand.  However, some contacts thought that the Russia-Ukraine conflict would affect confidence which, coupled with shortages of high materials prices and supply issues, could lead to investment decisions being delayed.

Finally it is worth reflecting on the outcome of the MPC meeting.  In February, when they raised the Bank Rate to 0.5%, there were clear signals of further rate rise to come this year and, indeed, this is what happened this week.  However, the MPC messaging also changed to suggest a lower likelihood of further increases and there was even one member of the Committee – Jon Cunliffe, one of the Bank’s Deputy Governors – voting to leave rates unchanged as he was concerned about the impact of inflation on growth in the economy.  It is also worth noting that while the conventional theory is that higher interest rates are a policy tool to counter rising inflation, there is a question mark over its effectiveness, especially in the short-term, when external factors, such the increase in global oil, gas and commodity prices, are driving inflation.

You can access the Bank of England’s Agents’ Summary of Business Conditions on their website at and the summary and minutes of the MPC meeting can be found at  Both of these pages have the facility to download a pdf version or you can request these from MTA.


European Industrial Production, January 2022:  The latest data from Eurostat is continuing the recent trend of a divergence in industrial production between the Euro-zone countries and the EU as a whole.  Compared to December 2021, total industrial production in the Euro-zone was unchanged but it grew by +0.4% in the wider area of the EU.  The contrast is even starker if we look back to January 2021 because, while the EU as a whole has seen growth of +0.4% over the level of a year ago, for the Euro-zone, industrial production is -1.3% lower.

[Note:  Industrial production is dominated by manufacturing output but it also includes the extraction industries (mining & quarrying) and utilities (supply of electricity, gas & water).]

We don’t have much industry detail in the Eurostat bulletin but there is a possible clue in the fact that capital goods is the weakest on all of the comparisons.  Month-on-month, output of this sub-sector fell by -2.4% in the Euro-zone and -1.9% for the EU;  compared to a year earlier, production was down by -8.4% and -7.1% respectively.  In particular, the automotive industry is part of this sub-sector and has been hit hardest by the shortage of electronic components.

However, from this, we might expect countries like Germany and Spain which have large automotive industries to be the worst affected but this is not held up by the country data.  It may, therefore, simply be the case that the volatility of the monthly data, especially at a time when the normal seasonal patterns have been disrupted – all the data is seasonally adjusted – is driving these changes.

Comparing with January 2021, among the 26 Member States who have published Industrial production data (Cyprus is missing), 19 have reported an increase while only 7 have a decline.  The largest increases were in Lithuania (+24.7%), Austria (+17.3%), Poland (+16.6%) and Bulgaria (+16.4%), while the largest falls were in Ireland (-20.0%), Portugal (-4.2%), Malta (-3.8%) and Italy (-2.6%).

You can download the euro-indicators bulletin from the Eurostat website at (15 March) or request it from MTA;  we can also send you the more detailed data download and analysis that includes the breakdowns by industry – contact Geoff Noon (email:  [email protected]) for a copy of the data files.


UK Foreign Trade by industry, 4th Quarter 2021:  The Office for National Statistics (ONS) has published its estimates of the UK’s foreign trade (exports/imports) by industry sector for the 4th quarter of 2021;  of course, this completes the calendar year and we will focus mainly on that data in this note.  Our main interest is in 4 industries which are key purchasers of manufacturing technology – metal products, machinery, automotive and other transport equipment (mainly aerospace) – and we have grouped them under the informal title of Metal Engineering;  there is also a wider group of All Engineering which also includes electrical equipment and the computer, electronic and optical products industries.

Exports of the Metal Engineering industries grew by +6.7% in 2021 but as this followed a fall of -21.9% in 2020 at the height of the pandemic, we are still a long way from recovering from that impact.  This pattern of a modest recovery is repeated in all but one of the industries;  metal products is the exception where export growth of +12.7% in 2021 following a fall of “only” -6.0% in 2020 means that exports are now above their pre-pandemic level.

On the import side of the equation, arrivals in the Metal Engineering group increased by +4.1% in 2021 but, as with exports, this was nowhere near enough to counter the reduction of -23.1% that we saw in 2020.  Similarly, this pattern was repeated in 3 of the 4 individual industries, although the exception here is aerospace where the value of imports fell in 2021 by -8.3% following the decrease of -32.5% in 2020.

Overall, there was a trade deficit for the Metal Engineering industries of £10.1 billion in 2021 but if we add in the electrical/electronic industries, All Engineering has a deficit of £43.6 billion.  Only the aerospace industry has a trade surplus – £11.9 billion in 2021 – with the deficits in the Metal Engineering group led by the automotive industry (£13.2 billion).

Exports of the All Engineering category accounted for just over 49% of total manufactured exports for the UK in 2021, emphasizing the importance of the sector to the UK economy beyond what might appear to be a relatively small share overall.  For imports, this wider group made up more than 44% of arrivals of all manufactured products.

In the context of Brexit, exports of the Metal Engineering industries to the European Union (EU) accounted for 43% of total exports:  this is actually higher than in either 2019 or 2020, although this may say more about global demand than the impact of Brexit.  Metal Engineering deliveries to the EU grew by +14.2% in 2021, with substantially stronger growth for metal products (+26%) and aerospace (+37%) held back by an increase of only +1% for the automotive industry.

We perhaps see more of a Brexit picture in the import data;  arrivals of the Metal Engineering industries fell by -4.1% in 2021 following a decline of -21.5% in 2020, with only the machinery industry seeing a positive trend last year.  For 2021, arrivals from the EU of the Metal Engineering industries accounted for nearly 59% of total imports;  this is lower than in either of the two previous years with significantly lower shares for the metal products and automotive industries.

You can get the ONS data file is available from their website at (16 March) or we can send you our analysis of the data – if you would like the excel files, please contact Geoff Noon at MTA (email:  [email protected]).

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