UK Manufacturing Output , January 2023: Data published this morning by the Office for National Statistics (ONS) shows that manufacturing output fell by -0.4% compared to December 2022 and in the latest three months (November and December 2022 and January 2023) output was -0.2% lower than in the previous period (August, September and October 2022) and -5.5% down on a year earlier (November and December 2021 and January 2022). The level in January 2023 was 97.3% of the pre-pandemic figure (February 2020 for the monthly data).
All but one (intermediate goods) of the sub-sectors of manufacturing saw output fall in January on a seasonally adjusted basis, although of those with a reduction, capital goods had the smallest decline at -0.6%. Looking at the rolling 3-month trend, there is a mixed picture but capital goods is the strongest sub-sector, at least for the short-term comparison, with output +1.3% higher than in the previous 3-month period; compared with the same months a year earlier, this sub-sector lies somewhere in the middle with output down by -4.8%. The January output figure is 95.0% of the pre-pandemic value – this is the 2nd weakest of the sub-sectors on this comparison, behind only consumer durables.
Among our key industries, output in January fell in machinery (-1.5%), automotive (-1.4%) and aerospace (-0.2%) but edged up (+0.1%) for metal products. The rolling 3-month trends gives a more promising picture with growth of +4.8% for the automotive industry, +0.8% for machinery and +0.7% for aerospace – ironically, output of the metal products industry fell by -2.2% compared to the previous 3-month period. Looking back to a year ago, the picture is largely reversed again with a fall in output in the latest 3 months compared to the same months a year ago of -9.5% for metal products, -7.6% for automotive and -6.2% for machinery; on this basis, only aerospace saw any growth (+2.7%).
Finally, comparing the January output value with the pre-pandemic month (February 2020), output in the machinery industry stands at 108.1% and aerospace is at exactly 100.0%; however, output of the metal products industry is only 82.4% of its pre-pandemic level and the automotive industry is at just 69.6%.
You can download the ONS Statistical Bulletin from their web-site at https://www.ons.gov.uk/releasecalendar (10 March) 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, January 2023: The output data for the main sectors of the economy are used by the ONS to calculate a monthly estimate of GDP; the headline figure is an increase of +0.3% following the decline of -0.5% in December 2022.
However, taking a 3-month rolling average, GDP growth was zero in both December 2022 and January 2023 suggesting that, overall, the UK economy has stagnated around the turn of the year. Despite the growth in January, the UK economy is estimated to be -0.2% lower than before the Covid pandemic (this is taken to be February 2020 for the monthly data).
Given it size as a proportion of the economy, the service sector inevitably drove the increase in GDP in January with an increase of +0.5%. Within the sector, the largest growth came from education, with school attendance levels returning to normal following a sharp fall in December. There was also an increase in transport & storage services which was led by postal & courier services which recovered following strikes in this industry in December. There was also an improvement in arts, entertainment & recreation with the return of a full Premier League football programme in January after the end of the FIFA World Cup.
We have already reflected on the fall in manufacturing output and the sector was joined in negative territory by construction where output fell by -1.7% in January; this was the weakest month in percentage terms since June 2022 (-2.0%) and the lowest monthly value since February 2022. This turned the 3-month rolling trend negative (-0.7%) for the first time since the period to August 2022 and to the greatest extent since October 2021. The fall in construction output came from a decline in new work which more than outweighed a modest increase in repair & maintenance activity. Anecdotal evidence quoted by the ONS suggests that the bad weather at the start of January which hampered new work but, slightly ironically, boosted repair activities.
There are more details in the range of ONS Statistical Bulletins which can be downloaded from their website at https://www.ons.gov.uk/releasecalendar (10 March) or on request from MTA.