UK Manufacturing Output , November 2023: The Office for National Statistics (ONS) released the latest data on manufacturing output at the end of last week, just too late for our publishing schedules. Although the headline shows month-on-month growth of +0.4% in November, the negative values in the two previous months mean that manufacturing output over the latest 3 months (September, October and November) was -1.9% lower than in the previous period (June, July and August) but still +1.3% higher than a year earlier.
The level of output in November was only 93.6% of its pre-pandemic peak – for the monthly series this is taken to be February 2020. In the immediate recovery after the initial lockdowns, manufacturing output grew to more than its pre-pandemic peak but then fell back again through 2021 and most of 2022 before a modest upward trend in 2023.
In the latest 3-month period, the capital goods industries saw output fall by -1.7% compared to the previous block but the level was +7.0% higher than a year earlier; this suggests a modest correction in a recovery phase, although we will see in a minute, there are a range of factors at work. Output in November stood at 93.9% of its pre-pandemic level.
Turning to our 4 key industries, only the metal products group recorded an increase in output in the latest 3 months (+0.3%) but with a much stronger performance of +9.4% compared to the same 3-month block near the end of 2022. Despite this medium-term growth, output of this group was only 86.7% of its pre-pandemic level.
The recovery in output for the automotive industry following the supply chain shortages appears to be ending with activity in the latest 3 months falling by -1.0% compared to the previous period while recording growth of +20.8% compared to the September to November period in 2022. This recovery is further emphasized by noting that despite a fall in November, output of this industry still stood at 101.5% of its pre-pandemic level.
The aerospace industry may be back on its upward trend with a rise in output in November; however, thanks to weakness in the two previous months, over the latest 3-month block, output fell by -0.2% compared to the previous period. Despite this, it is still +5.3% higher than a year ago, although only at 75.1% of its pre-pandemic level.
Finally, the machinery (mechanical engineering) industry is the weakest performing at the moment. In the latest 3-month period (September, October and November 2023) output fell by -6.0% compared to the previous period (June, July and August 2023) and was -3.9% lower than the same point last year (September, October and November 2022). Output in November was only 82.0% of its pre-pandemic level.
You can download the ONS Statistical Bulletin from their web-site at https://www.ons.gov.uk/releasecalendar (12 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.
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UK GDP, November 2023: The ONS uses the output data to produce the monthly estimate of GDP for the UK economy. Following the fall of -0.3% in October, UK GDP rebounded by +0.3% in November but despite this it is estimated to have fallen in the latest 3 months (September, October and November) by -0.2% compared to the 3 months to August. It will be a close call on the quarter as a whole with everything depending on the December figure, although identifying a recession also depends on no upward revision to the fall of -0.1% that was recorded in Q3.
We have already seen that manufacturing output registered a month-on-month increase but it was the service sector, with growth of +0.4% in November that made the largest positive contribution to the increase in GDP.
We will come back to this in a moment but it is worth noting that output of the construction sector fell by -0.2% in November and by -0.6% over the latest 3-month period. The monthly fall in construction output was entirely in new work which was down by -2.0% while repair & maintenance activity grew by +2.1% compared to the October level.
In the service sector, output increased by +0.4% in November but with no change if the 3-month rolling average is used instead. The largest contribution to growth in the service sector came from the information & communication group, although this was only a partial correction to falls over the two previous months. Within this group, the strongest growth was in publishing activities (mainly attributed to computer games).
Output in consumer-facing services grew by 0.6% in November 2023 but it remains 5.8% below pre-coronavirus (COVID-19) pandemic levels (February 2020), while all other services were 7.5% above. The largest positive contribution in November 2023 came from retail trade, except for motor vehicles and motorcycles, which grew by +1.3%. The largest negative contribution to consumer-facing services in November 2023 came from travel agency, tour operator & other reservation service & related activities, which fell by -3.6% in November 2023.
The growth in November 2023 for consumer-facing services follows four consecutive monthly falls and looking more broadly, consumer facing services fell by -1.0% in the 3-months to November compared with the period to August. The largest contribution to the fall over this period were falls of -2.1% in food & beverage service activities and -8.4% in travel agency, tour operator & other reservation service & related 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 (12 January) or on request from MTA.
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Qimtek Contract Manufacturing Index, 4th Quarter 2023: The latest report of the contract manufacturing index (CMI) from Qimtek showed growth of 105% compared to the weak 3rd period of the year but it was only +7% higher than in the final quarter of 2022. In part, this strong quarter-on-quarter growth reflects the release of projects that were being held back earlier in the year.
Qimtek operates a clearing house for contract manufacturing and the CMI tracks the purchasing budget of companies that are looking to outsource manufacturing work. The latest data is based on work for 178 companies and 279 projects.
The index is split across three types of operations – machining, fabrication and “other”. The machining category accounted for 58% of the projects in Q4-23 with quarter-on-quarter growth of +51% but only a +3% increase compared to a year earlier.
For fabrication, which accounted for 32% of orders in the latest quarter, there was growth of +157% compared to the 3rd period of the year and +12% over Q4-22. The “other” category covered the remaining 10% of projects and although the activity was +168% higher than in Q3, it was -1% down on Q4-2022.
The largest industry group in the latest period was industrial machinery which accounted for 35% of the projects by value; it was followed by food & beverages (12%), electronics (12%) and consumer products (11%).
You can get more details on this report from the Qimtek website at https://www.qimtek.co.uk/blog/qimtek-contract-manufacturing-index-quarter-4-2023.