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UK Quarterly National Accounts and Investment, 1st Quarter 2021:  The Office for National Statistics (ONS) has published the detailed analysis of the data of the 1st quarter of 2021 - this shows a small downward revision so that the UK economy is now estimated to have contracted by -1.6% (the first estimate was -1.5%) compared to the previous quarter and is -8.8% (formerly -8.7%) lower than a year earlier.

At the sector level, both services and manufacturing contracted on a quarter-on-quarter basis but there was an increase in output from the construction sector.  Within the service sector, the largest fall was in education which reflects the closure of many schools in January and February - in part this highlights the difficulties in measuring output of a sector like this as most children were still learning, albeit on-line and how do you compare the effectiveness of this activity.

Within manufacturing, by far the largest decline was in the transport equipment industries - this covers both automotive and aerospace - with food & drink and basic metals & metal products also showing a significant decline.  This was mitigated to some extent by an increase in output of pharmaceuticals and, to a lesser extent, for the machinery industry.

However, the most interesting part of this set of data is the detailed figures for investment by industry.  The initial release only had the figures for total business investment which now show a fall of -11% compared to the final quarter of 2020 to a level that is -17% lower than a year ago in the 1st quarter of 2020.

The new data shows that investment by the manufacturing sector was -7% lower than in the previous quarter and -18% down on a year ago;  however, it is worth noting that the 1st quarter of 2020 was an exceptionally strong figure and there continue to be some anomalies in this data series through 2019 - these may well get sorted out when the ONS publish the Blue Book in the Autumn which will include a comprehensive set of data revisions.  The manufacturing sector accounts for around 15% of total business investment.

Capital expenditure by the engineering & vehicles industries accounts for about 45% of total manufacturing investment.  The short-term comparison here is relatively favourable with a quarter-on-quarter fall of only -2% but reflecting the very strong figures from a year ago, the change compared to the 1st quarter of 2020 is -25%.

You can download the ONS Statistical Bulletin for the National Accounts from their web-site at (30 June) 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 30 June).

European Commission Economic Sentiment Indicator and Capacity Utilisation, June 2021:  The European Commission (EC) draws from a range of surveys to construct confidence indicators for six sectors of the economy and then uses five of these to compile its Economic Sentiment Indicator (ESI).  Because of the data collection periods, the month is that in which the data is published, although it really refers to the previous month so these results really apply to May despite the title.

There was another significant improvement in the headline ESI for both the Euro-zone and the EU as a whole;  both series are now well above the long-run average and are at a 21-year high level.  The main driver of this was the service sector indicator, reflecting the opening of economies following the Covid-induced lockdown, but there were positive trends in all of the sectors - financial services, which is not part of the ESI calculation, had the strongest increase.

Although there was only a modest increase in industry confidence, this extended the all-time high level from the previous month and is now the 7th consecutive monthly increase.  This improvement in confidence (which for industry is calculated from the responses to three questions) was the result of very positive developments in the respondents assessments of the current level of total order books (all-time high) and stocks of finished products (scarcer than ever - and, therefore, a potential distortion to the confidence indicator) although this was balanced slightly by a decrease in expectations for output over the coming 3 months (mainly because this had reached an all-time high in April, so further improvement was unlikely).  While not included in the calculation of confidence, the assessment of export order books also improved but output over the pat 3 months fell back slightly from its peak in the previous month.

At a country level, the ESI was at an all-time high in Germany as a result of another strong improvement, while there were more modest increases in Italy, Netherlands and France;  for the other large EU economies, the ESI in Poland was only marginally higher than in the previous month and Spain saw a small decline.

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