UK Manufacturing Output , December, 4th Quarter & full year 2022:  The manufacturing output data published by the Office for National Statistics (ONS) this morning showed no change on the November figure.  However, we prefer to concentrate on the 3-month trends, especially this time as it makes up the 4th quarter of the year.

Total manufacturing output fell by -0.1% compared to the 3rd quarter and by -4.7% for 2022 overall.  The latter unwound about half of the +9.7% growth recorded in 2021.  As a result, manufacturing output at the end of the year was 101.4% of its pre-pandemic level – for the quarterly data this is taken to be the 4th quarter of 2019 but the monthly series uses February 2020 as the starting point for this comparison (that was a particularly strong month for manufacturing activity, so on the monthly comparison, December 2022 was only 97.7% of the “pre-pandemic” figure).

There is slightly better news at the detail level with the fall in output concentrated in the intermediate and consumer durables groups.  Output for the capital goods industries increased by +0.7% compared to the 3rd period of 2022 but for the year as a whole there was a fall of -7.2% (this made it the weakest of the sub-groups);  as a result of this decline, output at the end of 2022 was only 96.9% of its pre-pandemic level.

Turning to the individual industries and concentrating on the 4 key ones for suppliers of manufacturing technology, we have a mixed set of trends with growth for the automotive industry, no change in aerospace output and reductions for machinery and, to a higher degree, for metal products.  Starting with the positive news, output of the automotive industry grew by +6.2% compared to the previous quarter but despite this, for the year as a whole, there was a reduction of -12.1% and in Q4-22, output was only 69.0% of the pre-pandemic level.

There was a marginal quarter-on-quarter improvement (+0.1%) in output of the aerospace industry in the final period of 2022 but we again see a decline – in this case of -6.0% – comparing 2022 with 2021;  however, the pre-pandemic comparison is more healthy with Q4-22 output at 115.8% of its pre-pandemic level.

The pre-pandemic comparison for the machinery industry is similarly positive with output 109.7% of the Q4-19 level despite a fall in the 4th quarter of 2022 of -0.4% compared to the previous period.  The similarities to the aerospace industry continue in the full year figures which showed a fall of -10.3% compared to 2021 although it has to be noted that according to the ONS data, there had been growth of +28.1% that year compared to 2020 which meant that 2021 had the highest output for this industry since the current time series began in 1997.

Finally, output of the metal products industry fell again in the 4th quarter of 2022 with a reduction of -2.7% compared to the previous period which meant it stood at only 83.1% of its pre-pandemic level.  Therefore, it will not be a surprise to hear that output of this industry in 2022 was -11.1% lower than in 2021;  in this case, this is not tempered by 2021 having been a strong year, hence the low figure for the pre-pandemic comparison compared to the machinery and aerospace industries.

You can download the ONS Statistical Bulletin from their web-site at (10 February) or request it from MTA;  we also have an analysis of the key industries which is available to members – please contact Geoff Noon ([email protected]) if you would like these charts.


UK GDP, December, 4th Quarter and full year 2022:  As always, the release of the output data – in addition to the manufacturing figures, the ONS publishes this for services and construction – generates the first estimate of GDP for the month.  Although construction output (seasonally adjusted) was unchanged from November – paralleling the manufacturing sector in this trend – there was a substantial fall in the service sector.  Some of this was because of strikes in various industries – most notably, there was a sharp fall in output for the human health & social work activities group where there were fewer GP appointments and operations for this reason.

However, as with the manufacturing data, we prefer to concentrate on the quarterly data.  With the definition of a recession being two consecutive quarters of contraction in GDP and the 3rd quarter showing a fall of -0.2%, this tag was very narrowly avoided with a zero figure being posted for Q4.  Looking at the value data, there was a very small increase in GDP but this is well within any margin for error and it would take very little revision to these figures to convert this into a negative value.

There have been some revisions to the data for earlier in the year;  growth in Q1 has been edged down to +0.5% (from +0.6%) but there is an upward revision for Q3 which was +0.3% – the fall here is largely due to the Queen’s funeral;  there is no change to the 2nd quarter figure.

For 2022 as a whole, the UK economy grew by +4.0%;  this sounds like a very impressive figure but this was mainly due to the base effects of the growth through 2021 which meant that 2022 started at a much higher level.  Perhaps a better illustration of 2022 is to compare GDP in the 4th quarter of each year as this gives growth of only +0.4%.

The latest forecasts from both the Bank of England and our colleagues at Oxford Economics still point to a mild and shallow recession for the UK economy in 2023.  The latter expects the first three quarters of the year to have a negative trend before the recovery starts in the final period of 2023.

Output of the service sector was unchanged in the 4th quarter of 2022, with growth of +5.5% for the year as a whole.  Within the sector, there was quarter-on-quarter growth in 6 of the 14 groups offset by a reduction in the other 8.  The strongest growth came from administrative & support services, particularly travel agents which grew by +15% in the final quarter;  the most significant reductions were in education and transport & storage – the latter was affected by strikes in the Post Office and on the railways.

Construction output increased by +0.3% in the final quarter of 2022, with growth for the year similar to the service sector at +5.6%.  The quarter-on-quarter trend was driven mainly by growth in infrastructure work (the first positive in this category since Q3-21) which was almost balanced by a reduction in private housing (both new work and repair & maintenance).

There are more details in the range of ONS Statistical Bulletins which can be downloaded from their website at (10 February) or on request from MTA.


UK Contract Manufacturing Index, 4th Quarter 2022:  Sourcing specialists, Qimtek, have published their analysis of trends in contract manufacturing activity for the 4th quarter of 2022.  This shows a significant fall in the last period of the year with the overall index down by -28% compared to the previous quarter and -34% over the level a year earlier in the 4th quarter of 2021.

Within the quarter, there was a poor start in October, followed by a strong November, especially for fabrication and “other” activity but a very weak end to the year in December, although the latter is normally weak because of the holiday season which makes it a short month.

The Qimtek Contract Manufacturing index (CMI) tracks the purchasing budget of companies that are looking to outsource manufacturing in any given month.  The data is extracted from the projects that Qimtek receives each month from manufacturing companies.  It is also broken down by both process and industry.

On the former, the split between the three process groups was broadly unchanged in the 4th quarter with fabrication accounting for 51% of the total, machining for 38% and “other” (which covers a range of work including casting and plastic moulding) the remaining 11%.

Among the industry sectors, the strongest was industrial machinery companies although this dropped back to the levels seen in the 2nd quarter following a spike in Q3;  the next largest groups were food & beverage and consumer products which both grew strongly in the 4th quarter.  The biggest falls were seen in construction (-80%) and oil/chemical/energy which was down by -73%.

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