UK Manufacturing Output , November 2021: Data released this morning by the Office for National Statistics (ONS) shows that manufacturing output increased by +1.0% compared to October. However, taking the rolling 3-month trend, output in the latest period (September, October and November 2021) was -0.1% lower than the previous 3 months (June, July and August 2021) although it was +1.2% higher than a year earlier (September, October and November 2020). Manufacturing output in November 2021 was 97.8% of the level in February 2020 which is taken as the pre-pandemic level in the monthly series.
Output of the Capital Goods industries increased by +2.8% in November but over the latest 3 month period, there were declines of -2.3% compared to the previous period and -4.6% over the same period a year earlier. Output in November is only 88.4% of the pre-pandemic level and is the weakest of the manufacturing sub-sectors and the consumer durables group is the only other one not have recovered above the pre-pandemic level.
At the industry level, there is a real mix of trends among the four that we track on a regular basis. Comparing November with October, output increased in the automotive (+7.8%), machinery (+7.4%) and metal products (+3.6%) industries but fell for aerospace (-2.6%) but there is a different picture using the 3-month rolling trend. On this basis, compared with the previous 3-month period, output fell in the machinery (-4.1%), automotive (-2.4%) and aerospace (-2.3%) industries and only grew for metal products (+1.1%).
The machinery (100.8%) and metal products industries (100.6%) are now just above the pre-pandemic level of output but both the automotive (75.7%) and aerospace (63.9%) industries are still a long way short of the level we saw in February 2020. While the global supply chain problems, especially for electronic components, are clearly a problem for the automotive industry, it is not clear what is holding back aerospace output; this sector is weak in many countries but the UK seems to be one of the worst hit. One possible explanation is that aircraft engines for wide-body planes is often sold as power-by-the-hour so while the physical product is built, it is not being used and this restricts the turnover value which is used to measure output.
You can download the ONS Statistical Bulletin from their web-site at https://www.ons.gov.uk/releasecalendar (14 January) or request it from MTA; we also have an analysis of the key industries which is available to members – please contact Geoff Noon ([email protected]) if you would like these charts.
UK GDP, November 2021: The monthly GDP data published by the ONS is based only on the output measure of the economy but does provide a useful indicator of how the most robust quarterly figures will move. The two headlines are that the economy grew by +0.9% compared to October which means that, for the first time, GDP is now above the pre-pandemic level – as with the manufacturing data, in the monthly series this is taken to be February 2020 although the quarterly national accounts data uses the 4th quarter of 2019 as the comparison which does give a different picture.
All of the 3 main sectors of the economy grew in November; we have already noted the data for manufacturing, but service sector output grew by +0.7% and construction expanded by +3.5%. In its analysis, the ONS splits the service sector between consumer-facing activities and other services; although both grew in November, with retail trade leading the way, consumer-facing output was still -5.0% lower than their pre-pandemic level while other services are +2.9% higher.
The largest contribution to growth in the service sector was from professional, scientific & technical services which grew by +2.5% in the month – there is evidence that this was partly due to work being drawn forward from the year-end which suggests that there may be some weakness in the December data. Transport & storage also made a significant contribution to service sector growth in November and there was an increase of nearly +15% in air transport activities although this category is still -23% lower than its pre-pandemic level.
The strong growth in the construction sector was driven entirely by new work, with a slight fall in repair & maintenance activity. The expansion of new work came in infrastructure and private new housing which, in both cases partly reflected large falls in October, although there is also anecdotal evidence that some of the issues in sourcing construction products have eased over recent months.
There are more details in the ONS Statistical Bulletins which can be downloaded from their website at https://www.ons.gov.uk/releasecalendar (14 January) or on request from MTA.
UK Productivity, 3rd Quarter 2021: The latest detailed figures from the ONS showed that output per hour worked across the whole economy was -1.4% lower than in the previous quarter but was +1.1% above the average level in 2019 before the Coronavirus pandemic took effect. In contrast, output per worker was -0.6% below pre-pandemic levels despite a quarter-on-quarter increase of +0.3%.
This latest release also has a breakdown of this data by sector and industry. For manufacturing, compared to the 2nd quarter of the year, output per job fell by -0.8% but the more relevant measure of output per hour worked increased by +0.5%. Compared to the average for 2019, the latest data shows an increase of +2.3% for output per job and +5.4% for output per hour.
Within manufacturing, the industry level breakdown shows output per hour in the machinery industry was -4.6% lower than in the 2nd period of 2021 but there were increases of +4.8% for the transport equipment industries (mainly automotive and aerospace) and +2.3% for the basic metals & metal products group. However, the comparison with the 2019 average gives a very different picture with output per hour increasing by +11.7% for the machinery industry but falling by -16.5% for the transport equipment industries and by -0.9% for the basic metals & metal products category.
You can get the ONS bulletin and the data tables from their website at https://www.ons.gov.uk/releasecalendar (11 January) or request them from MTA.