UK Manufacturing Output , August 2023: The data on manufacturing output released by the Office for National Statistics (ONS) gives us the details of the revisions that first appeared with the UK national accounts at the end of September. While the overall GDP trends for most of 2023 were only tweaked slightly, there have been more significant revisions to the recent data at the detailed level.
Manufacturing output is estimated to have fallen by -0.8% in August, following on from a fall of -1.3% in July – the latter figure having been revised down from -0.7%; in contrast, the June figure was revised up from +2.4% to +2.8% which means that manufacturing output in the latest 3 months (June. July & August 2023) was +1.7% higher than in the previous 3 months (March, April and May) and +3.2% above the level of a year earlier (June. July & August 2022). Overall, the revisions, which go right back to 1997, mean that manufacturing output in August was 94.5% of its pre-pandemic level (the datum is February 2020 for the monthly data series).
At the next level of disaggregation, output of the capital goods industries fell by -1.4% in August but, as with manufacturing as a whole, across the latest 3-month period, it increased by +2.2% compared to the previous block and by +8.7% over a year earlier. In this case, the August output number is 95.0% of its pre-pandemic level, with only intermediate goods (82.9%) weaker among the major sub-sectors,
There is a sharp contract in the fortunes for our key industries in August; output of the automotive industry increased by +1.7% compared to July, the metal products and aerospace industries only edged higher (by +0.3% and +0.2% respectively) while the machinery industry contracted by -1.3%, although in this case, it followed an increase of +2.8% in July.
Looking at the rolling 3-month period trends we see a slightly different combination of trends – in all these cases, the first figure shows the growth for the latest 3 months compared to the previous period and the second figure is the comparison with the same months a year ago. The automotive industry is again the star with growth of +8.1% and +24.2% respectively, while there was also a significantly positive trend for both metal products (+3.4% and +6.8%) and aerospace (+1.8% and +7.2%); the machinery industry remains the weakest with output falling by -0.5% and -1.0% respectively.
However, it is in the comparison with the pre-pandemic level of output that we see the biggest impact of the revisions which mainly affect 2020 and 2021. For example, in the pre-revision data for July, output of the aerospace industry, output was 103.2% of the February 2020 figure but, thanks to a massive upward revision to earlier data, the August number had been downgraded to just 75.8%. In the opposite direction, output of the automotive industry has gone from 85.8% of its pre-pandemic level in July to 102.2% in August – far more than can be accounted for by the increase in output in that month.
You can download the ONS Statistical Bulletin from their web-site at https://www.ons.gov.uk/releasecalendar (12 October) 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, August 2023: The monthly output data is used by the ONS to calculate an estimate of monthly GDP. Despite the sharp fall in manufacturing, the economy overall returned to growth in August with GDP up by +0.2% compared to July; that had been a very poor month and the decline in the economy was revised down to a fall of -0.6% compared to June. Despite this, the UK economy is estimated to have grown by +0.3% in the latest 3 months (June, July and August) compared to the previous period.
The construction sector shared the weakness of manufacturing and recorded a fall in the volume of output of -0.5% in August; this followed a reduction of -0.4% in July which seems to have been caused by the wet weather and lower temperatures. Despite this, output of the construction sector in the 3 months to August was +0.9% higher than in the previous 3-month period (March, April and May). The fall in output in august was concentrated in new work which fell by -1.5% while repair & maintenance activity increased by +1.0%.
The interesting part of the economy is the service sector where total output grew by +0.4% in August following a downwardly revised decline of -0.6% in July. As a result, the service sector only grew by +0.1% in the 3 months to August. The interest comes from the structure of change within the sector, with consumer-facing services seeing output fall by -0.6% in August, meaning that this part of the service sector is still -4.3% below the pre-pandemic level of output.
Overall, the largest negative contributions to the service sector came from arts, entertainment & recreation which fell by -7.4% in August following growth of +6.8% in July. In the other direction, the strongest growth was recorded in professional, scientific & technical activities which grew by +1.2% in August following +0.5% growth in July; this was led by architectural & engineering activities – technical testing & analysis industry which increased by +4.7% in August, with legal activities up by +2.3%.
The other major positive impact in August came from education which expanded by +1.6% in August after a fall of -1.7% in July; the latter was affected by two days of industrial action by teachers in England and although education attendance (the measure used for output in this industry) is considered to be constant over the school year so summer holidays do not reduce the estimate of education output in August, there is obviously little point in teachers going on strike in this month.
There are more details in the ONS Statistical Bulletin and time series which can be downloaded from their website at https://www.ons.gov.uk/releasecalendar (12 October) or on request from MTA.