UK Manufacturing Output, March and 1st Quarter 2024: The Office for National Statistics (ONS) has just published the output data for March and, therefore, the 1st quarter of 2024. We will focus mainly on the quarterly data but it is worth noting that manufacturing output increased by +0.3% compared to February but with rises in only 5 of the 13 sub-sectors. Only two of these made a significant contribution to the overall monthly movement with strong growth in pharmaceutical products almost balanced by a fall for transport equipment.
Taking the 1st quarter as a whole, manufacturing output is estimated to have grown by +1.4% compared to the previous quarter and by +2.2% over the level of a year earlier. Here, the transport equipment industries made the strongest contribution to the overall growth which suggests that the March trend noted above may be an outlier. This sector has grown for 6 successive quarters as we will see shortly. Total manufacturing output in Q1-24 was 100.7% of its pre-pandemic level (for the quarterly series this is taken to have been the 4th quarter of 2019).
Within the manufacturing sector, output of the capital goods industries (where most of our customers can be found) was +2.9% higher than in the previous quarter (Q4-23) and was +8.0% above the level of a year ago (Q1-24); the latest quarterly level is 105.7% of the pre-pandemic figure.
This brings us to the detailed industry level picture and here we focus on 4 key industries that cover the majority of the customers for the products of the manufacturing technology spectrum. The star performer has been the automotive industry where quarter-on-quarter output increased by +7.7%, with the comparison to a year earlier showing growth of +31.3%. This is a clear indication of the recovery in this sector due to the easing of supply chain problems but there is also a warning note with the fall of -1.1% in output in March – this may prove to be a blip but could also be the first indicator of a turning point for this industry.
The aerospace industry returned to growth following a blip at the end of 2023; output in the 1st period of 2024 was +1.3% higher than the previous quarter and +3.9% above the level of a year earlier. There is still room for recovery in this sector with output only at 90.4% of its pre-pandemic level.
The metal products industry is also doing well with quarter-on-quarter growth of +3.2% and an increase compared to a year earlier of +10.2% but, like aerospace, the latest output level is still only 94.2% of the Q4-2019 figure.
Finally, the weak spot is the machinery industry where output fell by -1.2% in the latest quarter and was -10.0% down on a year earlier. This weakness is also reflected in the fact that it is only at 84.0% of its pre-pandemic level.
You can download the ONS Statistical Bulletin from their web-site at https://www.ons.gov.uk/releasecalendar (10 May) 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, March and 1st Quarter 2024: The GDP data published by the ONS today showed, as expected, that the recession in the UK economy finished at the end of 2023 with the economy growing by +0.6% in the 1st quarter of 2024. It turned out to be the shortest possible recession of only two quarters and also a very mild recession with a cumulative fall in GDP of just -0.3%.
Because of this weakness in the 2nd half of 2023 and a relatively strong performance in Q1 (which drops out of the calculation this time), the UK economy was still only +0.2% larger than it was a year ago but if growth continues at a reasonable pace, the annualized rate of growth will pick up as we go through the year.
The figures for March which are derived from the output data only (full GDP data is also assessed on the basis of income and expenditure) show growth of +0.4%; this follows an upwardly revised figure of +0.2% (from +0.1%) estimate for February and +0.3% in January.
However, we will again focus on the quarterly figures and here we see that the growth recorded for Q1-24 was driven mainly by the service sector with 11 of the 14 groups within this sector seeing an increase in output. The largest contribution to this growth came from the transport & storage industries which was helped by the reclassification of a large company into this group. Overall, consumer facing services grew by +0.6% following a fall of -0.4% in the 4th quarter of 2023, reflecting an improvement in the retail trade sub-sector.
We have already noted the strong increase in manufacturing output but the construction sector did not share in this growth with a quarter-on-quarter fall in output of -0.9%, the same figure as was recorded in Q4-24. There is a divergence within the sector with new work activity falling by -1.8% compared to the previous quarter, while repair & maintenance activity grew by +0.3%. In part this is because of the wet weather this year, with February seeing a sharp fall in construction but there is also anecdotal evidence from the Bank of England’s Agents that suggests housing associations were re-directing budgets towards repairs and upgrading to deal with problems such as damp arising from tenants using less heating because of the higher cost of living. 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 (10 May) or on request from MTA.