UK Manufacturing Output, February 2024: Data published today by the Office for National Statistics (ONS) shows that the manufacturing sector had a good month in February with output growing by +1.2% compared to January; this took the level to its highest since June 2023 and to 95.7% of its pre-pandemic peak – for the monthly series this is taken to be February 2020 (4 years ago this month).
However, the monthly data can be quite volatile, especially if something upsets the usual seasonal pattern, so we prefer to focus on the rolling 3-month trends as this smooths out some of these variations. Thanks to the growth in February (and December 2023), manufacturing output in the latest 3-month period (December 2023 and January & February 2024) was +1.2% higher than in the previous 3 months (September, October and November 2023) and +2.1% higher than a year earlier (December 2022 and January & February 2023).
Although the monthly pattern is slightly different, we see a similar trend for the rolling 3- month trends for the capital goods industries. Output for these industries was +2.3% higher than in the previous 3 months and +8.2% above the level of a year earlier; significantly, output in February 2024 was exactly the same as 4 years earlier, leaving only the intermediate goods sub-sector (currently at 80.6%) where output is still to reach its pre-pandemic level.
There is a mix of trends among our key user industries, with automotive still leading the way with output in the latest 3 months rising by +8.6% compared to the previous period and by +32.9% compared to a year earlier. The February figure was 123.6% above its pre-pandemic level.
This is in sharp contrast to the machinery industries where output fell in February, more than reversing the improvement we saw in January, taking it to its lowest level since the height of the pandemic 4 years ago – as a result, output in February 2024 was only 81.4% of the same month in 2020. In the latest 3-month period, output fell by -2.3% compared to the previous 3 months and by -9.2% over the level a year earlier.
Between these two extremes we have the metal products and aerospace industries. Output of the first of these in the latest 3-month period increased by +2.8% compared to the previous block and was +11.6% higher than a year earlier. For aerospace, the equivalent trends were +0.8% and +3.9% respectively. However, looking back over 4 years to the pre-pandemic position, despite this growth recently, the metal products industry is at 91.5% of the February 2020 output with aerospace further behind at only 76.2%.
You can download the ONS Statistical Bulletin from their web-site at https://www.ons.gov.uk/releasecalendar (12 April) 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, February 2024: As always, the monthly output data brings with it the estimate of GDP for the UK economy. This showed month-on-month growth of +0.1% in February and although this is lower than the upwardly revised figure for January of +0.3% (originally +0.2%), it maintains the positive momentum for the 1st quarter of the year that should see the UK’s recession declared over after just two quarters (Q3 and Q4 of 2023). However, even with the growth we have seen in the first two months of this year, the UK economy is not yet back to the level we saw in June 2023 (the most recent peak).
Real GDP growth in the 3 months to February 2024 was +0.2% compared to the 3 months to November 2023.
We have already seen the strong month for the manufacturing sector but this was balanced by a fall of -1.9% for the construction sector which more than reversed growth of +1.1% in January, so this sector has contracted by -1.0% in the 3 months to February 2024. In the monthly data, output of both new work and repair & maintenance activity declined (by -2.3% and -1.4% respectively).
However, the largest part of the economy is the service sector, so the overall trends tend to follow quite closely. The percentage changes for the month are exactly the same as for total GDP – growth of +.01% in February following upwardly revised growth of +0.3% in January and an increase of +0.2% for the latest 3 months taken together.
The largest positive contribution to the growth in February came from the transport & storage sub-sector thanks to a combination of strong activity and the reclassification of a company into the sub-sector. There was also a positive impact from the information & communication group of industries, thanks mainly to telecommunications output growing strongly.
The largest negative contribution to services growth in February came from “wholesale & retail trade; repair of motor vehicles & motorcycles” where the decline was mainly attributed to a reduction in the wholesale trade excluding motor vehicles & motorcycles industry. There was also a negative contribution from human health activities, accommodation and food & beverage services. 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 April) or on request from MTA.