The latest data on the manufacturing sector from the Office for National Statistics (ONS) shows that although output fell by -1.0% in September, it grew by +0.2% for the 3rd quarter as a whole – mainly because of weakness in April and May below the line in the calculation. Despite this improvement in the latest period, manufacturing output was -1.1% lower than in the 3rd quarter of 2023.
For September, the most significant contributions to the fall in output were from “basic metals & metal products”, “pharmaceuticals” and “transport equipment” (mainly from the automotive industry); the largest positive contribution came from the “machinery and equipment” group but, as we will see, this is not entirely good news. However, monthly data can be volatile – the decline in September follows a similarly sized increase in August (which was revised up to +1.3%) – so we will concentrate on the quarterly data in the rest of this note.
We can breakdown the overall manufacturing data at a couple of levels; the first split is into the major sub-sectors which reveals the first bit of bad news for the manufacturing technology sector because the output of capital goods (where most of our customers can be found) fell by -0.5% compared to the 2nd quarter and was -2.3% lower than a year ago. This was the only sub-sector where output quarter-on-quarter, although it fell by less than the consumer durables group in the longer-term comparison.
The picture does not improve significantly when we look at the individual industries and, as always, we will focus on the four that are most important to members. Starting with the good news, the metal products group of industries saw output grow by +2.1% quarter-on-quarter (although this was mainly due to a strong August, hence the fall noted above for the September trend) and by +6.4% when compared to Q3-2023. This meant that the latest quarterly reading was +2.6% higher than the pre-pandemic level (for the quarterly data, this is based on Q4-2019).
However, that is where the good news ends because the other three of our focus industries saw output fall in the latest quarter – the machinery and aerospace groups fell by -1.6% and the automotive industry saw a decline of -1.2%. Compared to a year ago, machinery output fell by -9.3% and aerospace by -5.3% but the automotive industry is still +2.8% higher. Compared to their pre-pandemic level, output was +28.6% higher for the automotive industry but down by -5.8% in aerospace and -4.3% for machinery.
It is worth just noting the machinery industry where the data appears to have a strange pattern at the moment. Although, as noted above, output increased in September, there was a larger spike in June which is why the quarterly average of the respective 3 month periods shows a fall between Q2 and Q3.
You can download the ONS Statistical Bulletin from their website at https://www.ons.gov.uk/releasecalendar (15 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.