UK Manufacturing Output , June & 2nd Quarter 2022:  The Office for National Statistics (ONS) data for June shows a fall of -1.6% compared to May;  this almost reverses the strong growth (+1.7%) we saw in May.  It seems likely that this is at least influenced by the change in the Bank Holiday arrangements for the Queen’s Jubilee (see next item for more discussion of this).  As a result, output in June stood at 98.9% of its pre-pandemic level – for the monthly series this is taken to be February 2020.

However, it is the quarterly data that is more relevant, not least because it takes out some of the effect of the changes in the Bank Holidays;  for this series, the pre-pandemic level is taken to be the 4th quarter of 2019 because the initial impact of Covid occurred at the end of Q1-2020.  On this measure, manufacturing output was unchanged on the previous quarter, +1.8% higher than a year earlier (Q2-21) and 99.9% of its pre-pandemic level.

The first level of detail is the sub-sectors;  output of the capital goods industries increased by +0.4% on the previous quarter and was +1.1% higher than a year earlier.  The quarter-on-quarter trend puts this group in the middle of the range with both intermediate and consumer durable goods industries seeing output fall but behind the growth rate for consumer non-durables (industries such as food & drink and fuel).  Output of the capital goods industries is only 91.2% of its pre-pandemic level in Q2-2022, the weakest of the sub-sectors on this longer term comparison.

This brings us to the individual industry detail and some contrasting fortunes.  The best performing industry in the 2nd quarter was automotive where output grew by +6.5% and it is now +9.2% higher than a year earlier.  This supports the story that, while not over, some of the supply chain issues are at least starting to ease and the strong growth from a year ago is because this problem was underway then and we are seeing the recovery showing in both areas.  However, output of the automotive industry is only at 81.2% of its pre-pandemic level, so there is still a long way to go.

The other industry where output increased in the 2nd quarter of this year is aerospace with growth of +0.9%, but it is still -9.1% lower than a year ago and only 63.9% of its pre-pandemic level – clearly the comment about a long way to go applies to this industry as well.

The metal products industry, which includes sub-contract activity and general machining, has been the star performer recently and although output fell by -0.6% compared to the 1st quarter, it is +7.1% higher than a year ago and stands at 101.3% of its pre-pandemic level (the only one of “our” industries that is above the Q4-2019 level of output).  It is, at this stage at least, a levelling off at what for this industry is a relatively high level rather than a peak.

Finally in our portfolio is the diverse machinery industry – given the wide range of industries in this group it is a shame that we don’t have any breakdown in the output data that would give a clue to which areas are doing best.  For this “industry”, output fell by -2.8% on the previous quarter and was -7.9% lower than a year earlier (when this industry was at the peak of a mini-cycle);  output now stands at 93.1% of its pre-pandemic level.

You can download the ONS Statistical Bulletin from their web-site at (12 August) 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, June and 2nd Quarter 2022:  The monthly output data release from the ONS brings with it the monthly GDP estimate and, of course on this occasion, the first estimate of quarterly GDP growth for the UK.  We will focus mainly on the quarterly data as we did with the manufacturing output figures above but it is worth noting that GDP fell in June by -0.6% following a revised growth of +0.4% in May and a fall of -0.3% in April.

At least some of this monthly volatility is explained by the fact that the Spring Bank Holiday moved from May to June and there was an additional Bank Holiday for the Platinum Jubilee.  Some adjustment for working days is included in the seasonal adjustment but this does not fully account for the extra day this year.  The effect of this is to boost the May figures and depress those for June.

However, it is the quarterly data that attracts the headlines and especially this time with the fall in GDP of -0.1% compared to the previous quarter.  This leaves the UK economy +2.9% larger than it was a year earlier and +0.6% above the pre-pandemic level which is taken to be Q4-2019 for the quarterly data.

We have already seen that the manufacturing sector overall was flat in the latest quarter and with construction activity growing by +2.3% (thanks to an improvement in both new work and repair & maintenance activity) the fall in GDP came because of fall in output for the services sector.

This is wide ranging sector that accounts for by far the largest proportion of the economy but it can be split broadly between consumer-facing and other services.  The former remains below its pre-pandemic level while the latter is higher.  The largest negative contribution in Q2-22 came from human health & social work activities which reflects the large fall in both test & trace, orders for lateral flow tests and vaccinations compared to the previous quarter.  There was also a fall in output of the wholesale and retail trade, although not by as much as in Q1, with parts of this sector, including new car sales, still being affected by global supply chain disruptions.

This was partly off-set by positive contributions from accommodation & food service activities and the “other services” category – the former of these is the area that would have benefitted most from the extra Bank Holiday.  There was also an increase in activity in the administrative & support service activities group which came from an increase in business for travel agencies & tour operators who benefitted from the easing of Covid restrictions.

There are more details in the range of ONS Statistical Bulletins which can be downloaded from their website at (12 August) or on request from MTA.


UK Investment, 2nd Quarter 2022:  A third (and for us important) element of the data published last week are the figures for business investment and, this time, we do also have the industry breakdown which gives us some useful additional information.  However, headlines first, and these show that total business investment increased by +3.8% compared to the previous quarter and by +5.0% over a year earlier;  the 4-quarter rolling total is +4.8% higher.

Capital expenditure by the manufacturing sector was more muted in the 2nd quarter with seasonally adjusted growth of only +0.9% compared to the first period in the year and slipping back by -0.3% compared to a year earlier, although the 4-quarter rolling trend was still positive at +6.3%.  The manufacturing sector accounted for just over 16% of total business investment – this is its lowest proportion since the end of 2020 but is generally above the pre-pandemic levels we saw through 2019.

Within manufacturing, the Engineering & Vehicles industries accounted for just under 47% of total manufacturing investment;  investment by this group of industries had quarter-on-quarter growth of +5.1% but it was only +1.3% higher than in Q2-21 and the 4-quarter trend, while positive, was only +3.2%.  However, the seasonally adjusted total for the 2nd period of the year is the highest quarterly total since the 2nd quarter of 2019.

Another useful indictor is the breakdown of total business investment by asset type with the sub-set that is titled “ICT & Other Machinery” being the most relevant.  In contrast to the overall trend, spending in this category fell by -2.6% compared to the 1st period of 2022 but it was +5.0% higher than a year earlier and the 4-quarter rolling trend is stronger at +10.9%.  This category accounted for nearly 31% of total business investment in Q2-22.

As before, there are more details in the ONS Statistical Bulletin on business investment which can be downloaded from their website at (12 August) or provided on request from MTA along with our analysis of the industry detail.

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