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UK National Accounts, 4th Quarter and 2020:  The Office for National Statistics (ONS) published the UK National Accounts for the 4th quarter of 2020 and with that have revised estimates for GDP growth throughout 2020.  The immediate headline is that growth in the 4th quarter has been increased to +1.3% (it was +1.0%) - this is the strongest quarterly growth rate among the major European economies and ahead of the USA, but behind both Canada and Japan (although both of those had more modest growth in the 3rd quarter).

However, there have been some larger revisions to the data for earlier in the year, partly from more data having been received but also arising from better estimation of economic activity in some hard to measure industries.  Growth in the 2nd quarter is now estimated to have fallen by -19.5% (revised from -19.0%) with the “bounce” in the 3rd quarter now put at +16.9% (formerly +16.1%).  Despite these relatively large revisions, the overall impact on the trend for 2020 as a whole is relatively small and the UK economy is now estimated to have been -9.8% smaller than in 2019 (revised from -9.9%).

At the sector level, the manufacturing sector is now estimated to have grown by +3.3% in the 4th quarter (unchanged trend, although the levels data has been revised) giving a reduction of -9.5% for 2020 as a whole (revised from -9.9%).  The revised trends for the construction sector are +2.7% (was +4.7%) and -14.0% (from -12.5%) respectively, while the service sector has seen the quarter-on-quarter trend revised up to +1.0% (from +0.5%) but the changes elsewhere across the year mean the sector is -9.0% smaller than in 2019 (-8.9% in the previous estimate).

With only adjustments to previously published data for GDP, the most important new data in this release is the investment figures at the detailed industry level.  Total business investment in 2020 is now estimated to have been -10.2% lower than the previous year, although within that, spending on “ICT & Other Machinery” only fell by -5.1% and accounted for just over 29% of the total.

However, it is the industry level data that is of most interest to us and although it covers much more than purchases of machinery, it gives a useful indicator for MTA members.  Manufacturing investment fell sharply in the 2nd quarter of 2020, albeit from an historically high level around the turn of the year and has recovered some of the lost ground.  As a result of a weak set of data in the 2nd quarter of 2019, total manufacturing investment in 2020 was only -3.4% lower than in 2019 and accounted for an increased share of total business investment at 15.6%.

Within manufacturing, data for the Engineering & Vehicles Industries saw a similar but more exaggerated pattern up to the 2nd quarter of 2020 but the following two quarters have seen a further small fall in the seasonally adjusted totals for investment in this industry group.  As a result, 2020 saw a fall of -5.6% compared to the previous year which left this industry accounting for just under 47% of total manufacturing investment.

You can download the ONS Statistical Bulletin for the National Accounts from their web-site at (31 March) or you can request it from MTA – we can also provide analysis of the investment data which is also on the ONS web-site under a separate headline (also 31 March).



European Commission Economic Sentiment Indicator, March 2021:  The European Commission (EC) draws from a range of surveys to construct confidence indicators for six sectors of the economy (industry, services, retail trade, construction, consumers and financial services) and then uses the first five of these to compile its Economic Sentiment Indicator (ESI).

The headline shows a strong improvement in the ESI in both the EU and the sub-set of the Euro-zone compared to the previous month;  the EU measure is at exactly 100 which is the 20-year average for the series and for the Euro-zone is stands at 101.0.  This is the first time since the start of the Covid-19 outbreak that either series has been at this level.  This improvement was reflected in all six of the sectors covered by this report, although it was relatively mild for the financial services sector.

Focusing on the industry sector, confidence increased for the 4th month in a row although it is worth noting that this was mostly before the emergence of the latest wave of Coronavirus infections in Europe.  This was driven by very positive improvements in all three components of this indicator – output expectations for the coming 3 months, the level of total order books and stocks of finished products.  There was also an improvement in both output over the past 3 months and export order books, although these are not included in calculating the confidence indicator.

All of the six largest EU economies saw an improvement in the overall ESI in the latest data, with Germany leading the way and having its largest ever monthly improvement - it is also the only one of these economies (the others are France, Italy, Netherlands, Poland and Spain) where the ESI is above its long-run average.

Finally, just a note that “March” refers to the publication date;  the data collection period ran from the end of February to the middle of March, so these results really apply to trends during February despite the title.

You can download the EC report from their web-site at or it can be requested from MTA.