There are three other elements of the GDP data that was released last week which we cover here. Total business investment was broadly unchanged on the 1st quarter. The trade deficit grew with imports of goods rising more rapidly that exports. Productivity for the whole economy was higher than before the pandemic but increased significantly in manufacturing.
UK Business Investment, 2nd Quarter 2024: Data on business investment from the Office for National Statistics (ONS) showed the seasonally adjusted total virtually unchanged from the 1st quarter level and a fall of -1% compared to Q2-2023. The rolling 4-quarter total grew by +0.6%.
We don’t get the breakdown by industry group until the full National Accounts are published at the end of September but we can look at the split by asset type. There are five categories of which “ICT equipment & other machinery & equipment” (ICT&OM) is the most relevant to us – the other headings are transport equipment (which includes new aircraft), dwellings, other buildings & structures and intellectual property products.
On the seasonally adjusted basis, spending on ICT&OM fell by -5% compared to the previous quarter, was -3% lower than a year earlier but the rolling 4-quarter trend is broadly flat. In the 2nd quarter, ICT&OM accounted for just under 28% of total business investment.
You can download the ONS Statistical Bulletin on productivity from their website at https://www.ons.gov.uk/releasecalendar (15 August) or request if from MTA.
UK Trade, 2nd Quarter 2024: The ONS also published data on trade and we will focus on the quarterly trend for goods. Exports of goods from the UK were +1.3% higher than in the 1st quarter of the year, split fairly evenly between the EU (+1.1%) and non-EU trade (+1.5%). On the same basis, imports of goods grew by +6.6%; arrivals from the EU were up by +3.6% while non-EU imports rose by +10.4%.
This data excludes trade in precious metals (including non-monetary gold) because this can have some sharp swings that are not reflective of “real” trade. On this basis, exports to the EU rose because of an increase in deliveries of chemicals and material manufactures that was only partially balanced by a drop in deliveries of fuels and machinery & transport equipment (most notably shipments of cars to Belgium). In the exports outside of the EU, there was an increase for machinery & transport equipment (led by mechanical machinery to Hong Kong) and chemicals (principally pharmaceuticals to the USA), partly off-set by a fall in exports of material manufactures.
For imports, the main driver of the increase in arrivals from the EU came from the machinery & transport equipment group – this is noted to include cars from Belgium, ships from Italy and mechanical machinery from Germany. Outside the EU, the substantial increase in imports compared to the 1st quarter was due to a large increase for both fuels (led by imports of refined oil from India reversing a sharp drop in the previous quarter) and machinery & transport equipment (including aircraft from the USA and ships from China).
For machine tools, exports from the UK in the 2nd quarter were +3.9% higher than in the 1st period of this year but -7.8% down on Q2-2023; the total for the 1st half of the year is -9.1% lower than for January to June 2023. On the same basis, imports of machine tools were +4.1% up on the previous quarter, +3.6% higher than a year ago, but only +0.8% higher than in the 1st half of 2023.
For exports, there were similar trends for the EU and non-EU countries with declines of -12% and -5% respectively when comparing the 1st halves of 2024 and 2023. However, for imports, while arrivals from the EU increased by +12%, non-EU imports fell by -14%; as a result of this, the EU accounted for 64% of machine tool imports into the UK in the 1st half of 2024 – the highest ratio since our data series began in 1988.
You can download the ONS Statistical Bulletin on trade from their website at https://www.ons.gov.uk/releasecalendar (15 August) or request if from MTA.
UK Productivity, 1st and 2nd Quarters 2024: Wit the output data for Q2 coming out the day after the labour force figures that included hours worked and jobs numbers, the ONS also published a flash estimate of productivity for the UK economy. This showed output per hour worked (the preferred measure of productivity) was -0.1% down on Q2-2023, although output per worker increased by +1.1%. Output per hour decreased because hours worked increased slightly faster than output (measured by gross value added).
Compared to the 2019 average level, reflecting the pre-Covid position, output per hour increased by +2.1% and output per worker by +1.9%. The increase in output per hour worked on this longer-term comparison comes because output grew more than hours worked.
These figures are for the whole economy and we don’t yet have the industry breakdown for the 2nd quarter of 2024, although the ONS has now released the figures for the 1st period of the year. This is significant because manufacturing made the largest contribution to the improvement in productivity in the whole economy. Output per hour worked in manufacturing was +3.8% higher than a year earlier and +13.3% above the pre-pandemic level (the average for 2019).
You can download the ONS Statistical Bulletin and data-sets on productivity from their website at https://www.ons.gov.uk/releasecalendar (15 August) or request if from MTA.