UK Manufacturing Output, April: The Office for National Statistics (ONS) released the manufacturing output data for April this morning and the headline figure is a fall of -0.3% compared to the March level. However, this can be volatile for a number of reasons so we prefer to focus on the trends for blocks of 3 months; this shows that manufacturing output in the past 3 months (February, March and April 2021) was +0.9% higher than in the previous 3 months (November and December 2020 and January 2021) and +10.7% above the level of a year ago (February, March and April 2020). The latter trend is, of course, slightly misleading as we are now in the “one year on” period from the severe effect of the initial impact of the pandemic last Spring. Overall, manufacturing output in April 2021 was at 98% of the pre-pandemic level which, in monthly terms, is taken to be February 2020.
Some news sources may have quoted data for industrial production rather than manufacturing output. This also includes extraction and utilities activity and the former of these fell by -15% because of planned closures for maintenance of some oil fields which meant that industrial production was down by -1.3% in April.
Within manufacturing, it is the capital goods industries that are of most interest to MTA members as this is where most of our customers are classified and here, the news is a little more encouraging. Output of the capital (or investment) goods industries in the latest 3 months grew by +2.4% compared to the previous 3 months and by +15.5% over a year earlier. On a monthly basis, output of these industries in April was at 95% of its pre-pandemic level.
However, as we drill down in the data to the specific industries, we see some less welcome news but we will start with the machinery industry where output in the latest 3 months grew by +6.1% compared to the previous 3 months and, on the pre-pandemic comparison, output in April 2021 was 103% of the level from February 2020.
However, this is where the good news ends with the metal products industry - which includes activity of sub-contractors as well as companies making finished goods from metal (boilers, furniture, etc.) - seeing output -0.7% lower than in the previous 3 months and output in April at 96% of its pre-pandemic level.
The automotive industry seems to be the most affected by the global shortage of electronic components with companies struggling to reverse the reduction in orders last year given the other issues that are affecting this industry globally. As a result, output of this industry declined by -4.4% in April alone and over the latest 3 months it was -7.2% lower than in the previous 3 months period. Output of this industry in April stood at 89% of its pre-pandemic level from February 2020, although it should be noted that the comparison flatters this industry as output was already on a downward trend immediately before the pandemic took effect.
This brings us to the aerospace industry which is still struggling with month-on-month output falling in each of the 4 months of 2021; as a result, output in the latest 3 months was -2.7% lower than in the previous 3 month period and, perhaps more importantly, in April it stood at only 60% of the pre-pandemic level. Since the initial recovery - which was relatively modest in this industry - between June and September 2020, output has gone into reverse.
You can download the ONS Statistical Bulletin from their web-site at https://www.ons.gov.uk/releasecalendar (11 June) 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, April 2021: The manufacturing figures that we discussed above come as part of a package of data covering the major sectors of the economy, from which the ONS compiles its monthly estimate of GDP. This showed an increase of +2.3% in April (compared to March) as the economy started to re-open from April 12th. Comparisons with a year ago are fairly meaningless for the next couple of months as they correspond with the first two months of the initial lockdown but, for the record, UK GDP was +27.6% higher than in April 2020.
Inevitably, services made the largest contribution to this growth, with the consumer facing parts of the sector, including education, seeing the most rapid growth. Output of the services sector grew by +3.4% in April but remains -4.1% below the pre-pandemic level from February 2020. Overall, service es output grew by +1.4% in the 3 months to April 2021 (compared to the previous 3 months.
In contrast, construction output fell by -2.0% in April, although this followed exceptionally strong growth in March that is reflected in growth of +5.1% in the latest 3 months. The reduction was mainly in new work (-2.9% in April), although repair & maintenance activity also edged down (-0.6%).
You can get more details from the ONS Statistical Bulletin which can be downloaded from their web-site at https://www.ons.gov.uk/releasecalendar (11 June or you can request it from MTA.
European GDP, 1st Quarter 2021: The updated figures from Eurostat now show that while GDP fell by -0.3% in the Euro-zone (compared to the previous quarter), the decline in the EU as a whole was only -0.1%. This still leaves both areas having a double-dip recession with GDP having contracted by -0.6% and -0.4% respectively in the 4th quarter of 2020 but, clearly, this could get revised away, especially for the EU.
At the country level we see a different picture with, in most cases, a fall in GDP in either Q4-20 or Q1-21 but not both periods - the only individual countries to see a negative trend in both quarters were Austria, France and the Netherlands. There were 9 EU Member States, mostly relatively smaller economies, where GDP was positive in both of these quarters.
The key driver of the overall negative for the 1st quarter of 2021 is the fall in GDP for Germany of -1.8%. This more than outweighed the growth that they saw at the end of 2020 although not, of course, the “bounce” in the 3rd quarter. While the fall in Q4-20 was more widely spread, that was led by reductions of -1.5% in France and -1.8% in Italy – both of these economies were broadly flat (-0.1% and +0.1%) at the start of 2021.
There are more details in the Eurostat euro-indicators publication which can be downloaded from their web-site at https://ec.europa.eu/eurostat/news/euro-indicators (08 June) or requested from MTA.