The latest data on the manufacturing sector from the Office for National Statistics (ONS) shows that despite an increase in output of +1.1% in June, the 2nd quarter level was -0.7% lower than in the previous period and -0.6% down on a year ago. The latest figure is 99.6% of its pre-pandemic level (Q4-2019 for the quarterly data).
The largest positive contributions to manufacturing output growth in June 2024 came from the “manufacture of basic metals & metal products”, “manufacture of machinery & equipment and “manufacture of transport equipment” – with the latter covering both the automotive and aerospace industries, this is an exact match for our most important customer groups.
However, monthly data can be volatile, so we prefer to concentrate on the quarterly data and here the news is less positive, although it does offer a couple of pointers on what is happening at the detail level. The first of these is that the fall in output for the quarter came as 9 of the 13 industry groups showed a decline compared to the 1st period of this year, the most significant of which was in the manufacture of transport equipment which fell despite the growth in June noted above; anecdotal evidence from the SMMT suggests that factories have been repurposing to prepare for increased electric car manufacturing, which has reduced output, and also that temporary supply chain issues have restricted commercial vehicle production.
At the first breakdown of the overall manufacturing data, output in Q2-24 of the capital goods industries (where most of our customers can be found) fell by -0.6% compared to the previous quarter but was +2.2% higher than the level of a year ago (Q2-23); the latest quarterly level is 104.4% of its pre-pandemic position.
At the industry level, we will start with automotive as we have already mentioned it above. The ONS data shows a quarter-on-quarter fall in output of -3.7% but that the current level is +10.0% higher than a year earlier and at 124.9% of its pre-pandemic level (although note that automotive output was falling before the Covid outbreak, so the Q4-19 level was not the peak level that is it for some other industries).
Our other three key industries have all seen output increase in the 2nd quarter – by +2.5% for machinery, +1.5% for aerospace and by +0.7% for metal products. However, the longer-term comparisons are different with the latest output level being +9.1% higher than a year earlier for metal products, up by +4.0% for aerospace but -6.2% lower than in Q2-23 for the machinery industries. These three groups are all below their respective pre-pandemic levels at 94.9%, 91.8% and 86.3% respectively.
Finally, the other pointer we referred to earlier cover different time periods. Within the 2nd quarter, seasonally adjusted manufacturing output growth was sharply negative in April and flat in May before recovering in June. It is possible that the seasonal adjustment has struggled with the combination of changes in the timing of Easter and the comparison with 2023 where we had extra public holidays in May for the coronation.
You can download the ONS Statistical Bulletin from their website at https://www.ons.gov.uk/releasecalendar (15 August) or request it from MTA; we also have an analysis of the key industries available to members. Please contact Geoff Noon ([email protected]) if you would like these charts.