European Industrial Production, July 2021: The latest figures from Eurostat show that seasonally adjusted industrial production in July was +1.5% higher than in June for the Euro-zone and +1.4% up for the EU. Although still distorted to some extent by the impact of the Coronavirus outbreak a year ago, Euro-zone output was +7.7% higher than in July 2020, with growth of +8.3% for the EU.
The month-on-month growth rate follows a broadly flat performance in June and means that both series are at their highest level since the Spring of 2019. This is, perhaps, slightly surprising given the well-publicised shortages of components that have especially affected the automotive industry across Europe and it is possible that the seasonal adjustment, which will have been thrown out by the Covid-crisis, has played a part in these results.
Looking at the detail, the capital goods industries did better than the overall trend in the short-term comparison, with output increasing by +2.7% for the Euro-zone and by +2.4% for the EU compared to June 2021. However, this sub-sector was behind the trend when looking back over 12 months with growth rates of +5.9% for the Euro-zone and +6.3% for the EU as a whole.
With only Portugal (-0.1%) having total industrial production lower than a year ago, it is more interesting at the moment to look at the comparison with the previous month (June 2021) for the individual countries. Of the 26 Member States that have published their figures, total industrial output increased in 20 and fell in the other 6. The largest increases were in Ireland (+7.8%) and Belgium (+5.0%), while the largest decreases were in Lithuania (-2.0%), Slovenia (-1.8%) and Croatia (-1.6%).
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 (15 September) or it can be requested from MTA.
UK Trade by Industry, 2nd Quarter 2021: The Office for National Statistics (ONS) has published a breakdown of exports and imports of goods split up by industry for the 2nd quarter of 2021. In this note we will look mainly at trends compared with the previous quarter (Q1-21) as a marker of recovery from the Covid-induced economic downturn. Given that the 2nd quarter of 2020 was the most affected by the Covid outbreak, comparisons with that period (a year back from the latest data) are, inevitably, all showing strong increases which don’t really tell us much about what is happening.
We have grouped the data into two categories - the Key Engineering group is our usual 4 major customer industries of metal products, machinery, automotive and other transport equipment (the latter is mainly aerospace but also includes shipbuilding and railway equipment); alongside this we have a slightly wider category of All Engineering which is the first group plus the electronic, instruments and electrical engineering industries. The All Engineering group of industries accounted for 49% of total UK manufacturing exports in the latest period and for 46% of total UK manufacturing imports, so this is a vital part of the UK economy in trade terms (measured by value).
Exports of all manufactured goods increased quarter-on-quarter by +18.0% in the 2nd period of 2021; the engineering industries were slightly behind this with growth of +11.8% for All Engineering and +11.6% for Key Engineering. We saw similar growth rates for most of the individual engineering industries with automotive (up “only” +7.1%) and machinery (+18.1%) being the main exceptions.
Total exports across the All Engineering group were worth £37.6 billion which is the highest quarterly total since the 4th period of 2019 - on a quarterly basis, this is usually taken to be the pre-pandemic level, so although recovery is continuing, it still ahs some way to run. Given that the automotive industry is the largest exporter by value among those covered by this analysis, the relatively weak growth seen in that industry - probably caused by the well-known supply chain issues - means that we are looking to this industry to drive the remaining recovery in exports.
For UK imports, arrivals of all manufactured goods increased by +13.1% compared to the 1st quarter of the year; the Key Engineering industries outpaced this with growth of +20.1% but thanks to a small fall in imports of computers All Engineering imports increased by a more modest +12.2%. There is more variation between the separate industries in the import series with growth ranging from +35% for aerospace (+28% for all of the other transport equipment group) and+30% for automotive, through to +11% for the machinery industry, down to +3% for metal products.
Overall, the All Engineering group had a trade deficit of £10.4 billion in Q2-21, but the bulk of this is in the electronic, instruments and electrical engineering industries so the Key Engineering group only had a trade deficit of £1.8 billion in this period. The only industry category to have a trade surplus was other transport equipment and this was entirely due to the aerospace industry which recorded a surplus of £2.5 billion. The machinery industry was broadly in balance with a deficit of only £92 million, but there was a deficit of £2.7 billion for the automotive industry and £1.1 billion for metal products.
You can download the data files from the ONS web-site at https://www.ons.gov.uk/releasecalendar (15 September) or we can send you the version on which we have carried out the analysis above - contact Geoff Noon (email: firstname.lastname@example.org) if you would like a copy of this.