UK Manufacturing Output, October 2020: The Office for National Statistics (ONS) published its monthly raft of output data on Thursday morning and while it is the GDP data that attracts the headlines, it is the detailed figures on manufacturing output that are of more interest to MTA members. The latest release shows that manufacturing output grew by +10.0% comparing the latest 3 months (August, September and October) with the previous 3 months (May, June and July), although this still leaves the level -7.8% lower than in the same 3-month period in 2019. Looking at the monthly rate, manufacturing output grew by +1.8% compared to September and the level in October was 93% of that in February (pre-crisis).
At the sub-sector level, the capital goods industries had the strongest output growth rate both for October and the 3-month rolling trend; the latter showed an increase of +14.3% compared to the previous 3 months but, reflecting the size of the downturn in this sub-sector, it is -15.9% lower than a year earlier (August, September and October 2019) and the weakest of the manufacturing sub-sectors. The October level is 88% of that from February - again, the weakest of the sub-sectors on this measure.
Turning to the individual industries, among the 4 that we track on a regular basis, the automotive industry led the way in both month-on-month growth (+6.7% in October) and on the 3-month rolling trend – this was up by +64.0% compared to the previous 3 months, despite the exceptionally weak figure from April dropping out of the calculations. However, the October figure is only 84% of the pre-crisis level in February and output in the latest 3 months is -28.7% lower than a year earlier.
Data from SMMT on unit numbers produced in October show a fall compared to September for both cars and engines. However, the 3-month rolling trends do reflect the trends from the ONS data with car production up by +87% compared to the previous 3 months and engine output growing by +34%; the comparisons with the same months in 2019 were -21% and -18% respectively. Engine output will have been affected by the closure of the Ford factory in Bridgend which took place at the end of September, although latterly it was only producing engines for JLR which have moved to their own plant in Wolverhampton – production of Ford’s own engines stopped in February 2020.
There are also signs of life in the Aerospace industry where output grew by +5.1% in October; however, apart from the initial bounce in July (this industry was still contracting output in May and June, this is the first month of significant growth so the rolling 3-month trend only grew by +7.2% on the previous 3 months and output was -18.4% lower than in the same months of 2019. Another indicator of the delayed recovery is that output in October was only 78% of the February level, although for aerospace this was the 2nd highest month on record (after May 2018).
In the machinery industry, output accelerated slightly in October with month-on-month growth of +2.0% and the October figure is 89% of the February level; the rolling 3-month trend was +13.5% compared to the previous period but -18.0% lower than a year earlier. In contrast the metal products industry, which includes sub-contractors as well as a range of other activities, only saw output growth of +0.6% in October but, coincidentally, this is 89% of the February level; the trends for the 3-month rolling average are +10.7% and -10.8% respectively.
You can download the ONS Statistical Bulletin from their web-site at https://www.ons.gov.uk/releasecalendar (10 December) or request it from MTA; we also have an analysis of the key industries which is available to members - please contact Geoff Noon (email@example.com) if you would like these charts.
UK GDP, October 2020: The ONS also released the GDP figures for October which showed month-on-month growth of just +0.4%, leaving the level still7.9% lower than it was in February before the impact of Covid-19 was seen in the economy. We have already seen the growth in manufacturing - indeed this was the strongest of all the sectors and sub-sectors in the GDP calculations - and there was also a positive impact on growth from the construction sector.
The weakest part of the economy in October was the service sector which only grew by +0.2%, although this hides a range of outcomes for different elements of this, the largest sector of the economy. Most of the service industries actually saw an increase in output in October but the main exception was for hospitality where output fell by -14.4% as coronavirus measures were tightened – it also partly reflects the stronger recovery in that sector, especially in August but which was sustained in September.
There are more details in ONS Statistical Bulletin for GDP which can be download from their web-site at https://www.ons.gov.uk/releasecalendar (10 December) or requested from MTA.
European GDP, 3rd Quarter 2020: In the third release of data from Eurostat, GDP growth in the Euro-zone is now estimated to have been +12.5% higher than in the 2nd quarter of the year, with growth of +11.5% for the EU as a whole.
With only Luxembourg not having published its figures for the 3rd quarter, all of the other Member States saw growth in the 3rd quarter; this brings to an end the recession for those countries where GDP fell in both the 1st and 2nd quarters of the year – only Bulgaria, Greece and Sweden had growth in the 1st period of 2020, while the trend in that quarter was flat in Lithuania and Romania.
Only Sweden and Ireland had a positive trend for GDP when comparing the latest period with a year earlier (i.e. Q3-2019), while Greece (-11.7%) and Croatia (-10.0%) had a double-digit decline in their economy.
The Eurostat News Release can be downloaded from their web-site at www. http://ec.europa.eu/eurostat (08 December) or requested from MTA.
CECIMO Statistical Report and Orders Forecast: As we reported last week, CECIMO recently held its General Assembly and part of this was the usual bi-annual Statistical Report. This covers a range of data including production, exports, imports, consumption and orders, as well as individual summary country reports for most of the member associations. You can download this below – if you would like the excel version of the report, please contact Geoff Noon at MTA (email: firstname.lastname@example.org).
CECIMO also commissions a quarterly forecast of manufacturers’ orders based on data for the 8 largest countries. Please note that there is no country breakdown and that the forecast is for total orders for the manufacturers in those countries and is not a forecast of orders in the market. This suggests that there will be a strong recovery through the first half of 2021 before levelling off at an index value of around 105 in to 2022. The most recent peak in the index was 120 early in 2018 and the pre-Covid reading at the end of 2019 was 80; this, therefore, highlights a downward trend that was underway before the current crisis emerged. We have also attached the Orders forecast document below for members to download.
CELIMO Economic Webinar: CELIMO is the grouping of European Associations who represent importers/distributors of manufacturing technology and has some overlap of membership with CECIMO. As it was not possible to hold the usual meetings this year, CELIMO arranged an economic presentation with an overview of the European economic situation both for the whole economy and for the manufacturing sector.
You can watch the recording of the presentation at https://www.youtube.com/channel/UCgip1qsBqhPREpobbsYEfog/ and the slides with the notes from the presentation can be downloaded below.