UK Manufacturing Output , September & 3rd Quarter 2023: The Office for National Statistics (ONS) released the September output data this morning and the month-on-month trend shows an increase of +0.1% compared to August. There was an increase in output in 5 of the 13 sub-sectors, led by the computer, electronic & optical products and machinery industries.
However, the quarterly data is more useful as it smooths out some of the “noise” in the monthly data where things like factory shutdowns moving between adjacent months will affect the data trends. This shows that manufacturing output edged up by +0.1% compared to the 2nd quarter and was +3.0% higher than a year earlier. The latest figure is 100.2% of the pre-pandemic level (Q4-19 is the base period for the quarterly series).
Looking in more detail, output of the capital goods industries showed a quarter-on-quarter increase of +0.2% which puts it 8.5% higher than a year earlier – the strongest of the manufacturing sub-sectors on this comparison – and at 102.1% of its pre-pandemic level (ahead of only intermediate goods).
The only one of our 4 key industries not to see any growth in the 3rd quarter was machinery where output was flat compared to Q2 and only +0.2% higher than a year earlier – the latest figure is 92.7% of its pre-pandemic level. The strongest quarter-on-quarter growth was in metal products which was up by +3.3% on the previous period and by 8.3% on a year earlier; however, despite this, the level is only 90.2% of the pre-pandemic position.
Our other two industries – automotive and aerospace – had similar quarter-on-quarter trends with growth of +2.6% and +1.1% respectively; however, the comparisons with the 3rd quarter of 2022 are very different with the automotive industry growing by +25.9% as it continues its recovery from the supply chain problems but aerospace was “only” +6.4% above the level of a year ago. The pre-pandemic comparisons are also different with automotive industry output at 112.5% (this sector was already seeing falling activity before the pandemic struck) but aerospace only at 89.8%.
You can download the ONS Statistical Bulletin from their web-site at https://www.ons.gov.uk/releasecalendar (10 November) 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 and datasets.
UK GDP, September & 3rd Quarter 2023: The output data released this morning is used to compile an estimate of monthly GDP for both the month and, in this case, the quarter. GDP is normally a balanced figure from output, income and expenditure but this estimate only uses the first of these.
The UK economy is estimated to have grown by +0.2% in September, a marginal acceleration from the downwardly revised figures of +0.1% in August (there was a contraction of -0.6% in July). Inevitably given the size of the sector, these trends are similar to those for the service sector as we will see when we look at the quarterly data.
Percentage changes in GDP are expressed to one decimal point and at this level, the 3rd quarter of 2023 saw no change in the size of the UK economy compared to the previous quarter. However, it is worth noting that in this case this has been rounded up to 0.0% and there was a marginal fall when you look at the value data (-0.03%). This means that the economy grew by +0.6% compared to a year ago but it is worth remembering that there was an extra Bank Holiday in that period for the Queen’s funeral (this lowered the level of output in that quarter).
We have already discussed the marginal increase in manufacturing output in the 3rd quarter, a trend that was shared by the construction sector where the growth was driven by repair & maintenance activity (+0.7%) which was partly off-set by a fall (-0.3%) in new work.
The flat trend for the economy overall comes from a small fall (-0.1%) in the service sector where output fell in 8 of the 14 sub-sectors. In particular, output in consumer-facing service activities fell by -0.7% compared to the previous quarter. The largest negative contributions came from real estate (-0.4%) activities and transportation & storage subsector (-1.2%); the largest positive contribution to growth was from the professional, scientific & technical activities subsector, which grew by 0.6%, with the biggest increases being in architectural & engineering activities; technical testing and analysis.
Compared to a year ago, the service sector grew by +0.5% and construction by +2.5% (manufacturing was up by +3.0%).
There are more details in the various ONS Statistical Bulletins which can be downloaded from their website at https://www.ons.gov.uk/releasecalendar (10 November) or on request from MTA.
UK Investment, 3rd Quarter 2023: With this release of data, we also get out first look at the data on investment, although we will have to wait for the full quarterly national accounts just before Christmas to get the industry breakdown.
Total business investment fell by -4.2% compared to the 2nd quarter figure but that had been distorted by the arrival of new aircraft and the latest figure is back at the level of the 1st period of this year. Compared to a year earlier, total business investment was +2.8% higher than in the 3rd quarter of 2022 and the rolling 4-quarter figure (effectively an annualized rate) grew by +6.6% on the previous period.
In the absence of the industry figures, we have to rely on the spending by asset type to give us an indication for our industry and we focus on spending on “ICT & Other Equipment”. Investment in this category fell by -3.2% compared to Q2-23 but was at broadly the same level as the same period last year (Q3-22); the rolling 4-quarter trend shows an increase of +1.0%.
There are more details in the ONS Statistical Bulletin and associated tables which can be downloaded from their website at https://www.ons.gov.uk/releasecalendar (10 November) or on request from MTA.