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UK Business Investment and Foreign Trade, 2nd Quarter 2021:  As promised last week, we complete our round-up of the quarterly GDP data by looking at the figures for investment and foreign trade (exports/imports).

At this stage, the investment data published by the Office for National Statistics (ONS) is only at a high level but it does give us some useful pointers.  Total business investment (of which manufacturing accounts for about 15%) was +2.4% higher than in the 1st quarter of the year and +9.7% higher than a year earlier although given that was the weakest during the Covid-crisis, that growth rate is a little disappointing.  During the period from 2015 to 2019, the quarterly total for business investment at constant prices never fell below £50 billion, so the Q2-21 level of £46.3 billion is still low.

The only breakdown of this high level indicator is by asset type;  spending on “ICT & Other Machinery” is showing a more encouraging recovery with the latest figures being growth of +6.9% on the previous quarter and +29.5% above the level of a year ago.  The 2nd quarter figure of £15.8 billion is the highest quarterly total since the middle of 2008 (at constant prices), although the data on investment is notorious for being revised so we should not get too carried away.

Moving on to the foreign trade situation, the UK’s trade deficit on goods widened in the 2nd quarter with imports increasing by more than exports when measured in value.  This is a good illustration of why you need to consider both levels and trends because UK exports of goods increased by +13.8% compared to the 1st period of the year but this was an increase of just over £10 billion while the +12.5% rise in imports was almost £13 billion in value - hence the increased deficit while exports grew more quickly than imports.

The increase in exports for the quarter was almost entirely in trade with the EU - deliveries to the rest of the world only increased by +3.0% compared to +27.1% for shipments to the EU.  Without the detailed commentary that the ONS used to provide, it is hard to know the reasons for this trend but a combination of Brexit trading issues in the early part of the year, stock-piling at the end of 2020 and the impact of Covid-19 seems the most plausible explanation, alongside more conventional reasons such as improving business conditions in overseas markets.

The most significant increase in exports to the EU was in chemicals - as this category includes pharmaceutical products, the increase in the vaccination programmes in Europe during the 2nd quarter probably has a lot to do with this.  On the other hand, the 2nd largest increase was in the broad category of machinery & transport equipment, which includes cars and this group was probably more affected by Brexit issues and improving demand.

For imports, the increase in trade was more evenly split between the EU and the rest of the world with quarter-on-quarter growth rates of +12.3% and +12.8% (on similar values) respectively.  In this series, machinery & transport equipment saw the largest increase in imports for both areas, with the 2nd most important for arrivals from the EU being chemicals and material manufactures for the rest of the world.

You can download the ONS Statistical Bulletins from their web-site at (12 August) or request them from MTA.


European GDP, 2nd Quarter 2021: In an update of the preliminary release that we covered 2 weeks ago, Eurostat has not changed its estimates that GDP grew compared to the 1st quarter of this year by +2.0% in the Euro-zone and by +1.9% for the EU as a whole.  The comparison with a year earlier has been adjusted slightly for the Euro-zone and now stands at +13.6% (it was 13.7%) but there is no change to the figure for the EU which is at +13.2%.

Given the timing of the impact of the Coronavirus outbreak, all of the economies for which we have the 2nd quarter data (there are still 7 Member States that have not published their figures) have inevitably seen their economies grow in the comparisons with both the previous quarter and a year earlier.  With all of the missing data being in countries whose economies grew in the 1st period of the year, we can note that while the Euro-zone and the EU as groups had a double-dip recession with negative GDP growth in Q4-20 and Q1-21, among the individual countries, only Austria saw this happen, although France (with no change in GDP in the 1st quarter of 2021 following a fall at the end of 2020), Netherlands and Spain (which both had no change in Q4-20 and then a fall in Q1-21) only just avoided this fate.

Coming back to the latest data, the fastest growing economies were Portugal (+4.9% quarter-on-quarter) and Austria (+4.3%), while Cyprus only managed +0.2% with both Bulgaria and Lithuania at +0.4%.  Among the larger economies, Spain (+2.8%) and Italy (+2.7%) led the way, with Germany at +1.5% and France growing by only +0.9% compared to the 1st period of 2021.  For comparison, the UK economy grew by +4.8% in the 2nd quarter.

You can get the full details from the Eurostat News Release which can be downloaded from their web-site at (17 August) or requested from MTA.


UK Productivity estimate, 2nd Quarter 2021:  The flash estimate of UK productivity from the ONS shows output per hour (the preferred measure of productivity) fell compared to the 1st period of this year but is still +0.6% higher than the average for 2019 (the pre-pandemic level).  The alternative measure of output per worker showed the opposite trend with an increase compared to the previous quarter but to a level that is below the 2019 average.  Both of these are for the whole economy.

We see a similar trend for the manufacturing sector with output per hour falling compared to the start of the year but still running +3.1% above the average level for 2019.  This is because the number of hours worked is -6.3% lower than the average for 2019 while gross value added (GVA - effectively output) is only -3.4% lower.

There is also a breakdown of the manufacturing sector by broad industries and we see some interesting divergence of the trends.  While the Machinery and the Basic Metals & Metal Products industries have output per hour at +12.7% and +8.9% above the 2019 average level respectively because the change in hours worked is much lower than output in both cases, the Transport Equipment industry is -18.0% lower than the pre-pandemic level;  this is because output is -26.8% lower than in 2019 while hours worked has only fallen by -10.7%.  This fall in output is driven by the impact of the shortage of electronic components on the automotive industry coupled with the lack of recovery in the aerospace industry - these are the two main components of the Transport Equipment group.

You can access the ONS data on their web-site at (17 August) or request them from MTA;  we have added the commentary for the manufacturing sector and its industries based on the ONS data tables.


USMTO and CTMR, June 2021:  The US Manufacturing Technology Orders (USMTO) programme tracks orders in the US market, based on the reports from participants.  In the first half of 2021, orders were +48.6% higher than in the same period last year (January to June) at $2.5 billion.  While this is mainly because of the recovery from the impact of the Covid-19 outbreak and did not get back to more normal levels until September, it is also worth noting that the US market was down quite significantly at the start of 2020.

This is the strongest first half of a year since 2018 which AMT notes was a period when orders were at a 20 year high.  In addition, the June value of $490 million is the best month since September 2018 which was in the aftermath of the IMTS exhibition.  The rolling 12-month total from this series - which, of course, includes the tail-end of the pandemic effects - is at its highest level since October 2019.

We are still seeing this strong growth being reflected in most of the six regions used in this report.  For confidentiality reasons we don’t have the totals for all of the regions but we do have the trends for metal cutting machines which make up nearly 97% of the total market in 2021.  This shows that the market in the North-Central-West is +91% higher than it was in the first half of 2020, with four of the other five regions showing growth of at least +30%;  the exception is the South-East region where growth is “only” +9.5%.

The US Cutting Tool Market Report (CTMR) tracks orders for tooling on a similar basis.  This has turned the corner in June with the total for the first half of 2021 being +1.8% higher tan the first six months of last year;  this is the first time that the year-to-date trend has been positive since September 2019.  Apart from March 2021, the total for June is the strongest month since March 2020, just before the impact of the Coronavirus outbreak was seen on the cutting tool market.  There is no regional breakdown of the CTMR report.

You can download the press releases for the two surveys from the AMT web-site at, with the CTMR release also published on the USCTI web-site at (go to the News Releases tab);  alternatively, you can request either or both releases from MTA and we can make sure you get them when they are published each month.