The publication of the UK National Accounts by the ONS for the 2nd quarter has also brought with it the annual rebasing exercise and related revisions. There was little change to the GDP data over the past couple of years but some more significant changes to the investment data.
The revisions associated with the rebasing exercise have upgraded the UK’s economic recovery from the pandemic with growth in 2022 now put at +4.8% (from +4.3% before the revisions) and +0.3% (from +0.1%) for 2023. Despite the upgrading for last year, the UK still had a technical recession with a negative GDP in the 3rd and 4th quarters of 2023.
While we have the revised data for the manufacturing industry as a whole – the trends are now +3.8% for 2021, -7.4% for 2022 and +0.7% in 2023 (from +1.6%, -3.3% and +1.1% respectively) – we will need to see the detailed figures which are due out this morning (which we will report next week for operational reasons) for the industry level detail on this.
The Office for National Statistics has revised down the growth rate for the UK economy in the 2nd quarter to +0.5% (and it is only just this on rounding), having been +0.6% in the initial estimate which coincided with the June output data. This was largely because growth in the service sector was revised down to +0.6% from the initial estimate of +0.8% but both manufacturing and construction output were also slightly weaker than previously estimated.
Manufacturing output was weak in the 2nd quarter, mainly because of a quarter-on-quarter fall of -3.1% in the transport equipment industries. The ONS notes that automotive output was weak because of transitioning of factories to electric vehicles and temporary supply chain issues that affected commercial vehicle production. Growth in the machinery industries was also revised down from the initial estimate.
For construction, output fell by -0.2% in the 2nd quarter despite growth in both May and June. This reflects a decline in new work of -0.4%, which fell for its 6th consecutive quarter but repair and maintenance activity increased for the 11th consecutive quarter, with growth of +0.1% in Q2-24.
In the service sector, the largest contributor to growth in the 2nd quarter of 2024 was “information & communication” where all 6 elements saw output increase, led by “computer programming, consultancy & related activities”. Overall, business-facing services grew by +0.9% in Q2, while consumer-facing services fell by -0.3%; the largest drivers of this fall were a -1.1% decline in “buying & selling, renting & operating of own or leased real estate, excluding imputed rental”, and a -1.7% reduction in “wholesale & retail trade; repair of motor vehicles & motorcycles”.
You can download the ONS Statistical Bulletin for the National Accounts from their website at https://www.ons.gov.uk/releasecalendar (30 September) or request it from MTA.
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Business Investment, 2nd Quarter 2024: The publication of the Quarterly National Accounts also brings us an update of the data on investment, including a breakdown by industry sector and group as well as the usual revisions in the release.
The first point to note is that investment has been revised over the past couple of years but not consistently. Total business investment is now estimated to have grown by +5.9% in 2022 (+9.6% before the revisions) and by +2.7% in 2023 (from +5.5%). On the other hand, spending by the manufacturing industry has been revised up with growth now put at +6.7% in 2022 and +4.0% in 2023 (from +0.2% and +3.6% respectively before the revisions); this means that manufacturing accounted for 16.8% of total business investment in 2022 and 17.0% in 2023. Within manufacturing, capital expenditure by the Engineering & Vehicles industry group grew by +4.2% in 2022 and +3.9% in 2023 (revised from +2.0% and -2.1% respectively) and this group represented 44.1% of total manufacturing investment in both years.
Turning to the data for the 2nd quarter, total business investment is now +1.4% higher than in the previous quarter and +0.2% up on a year earlier, while the rolling 4-quarter total has grown by +0.1% compared to the previous period. Within the total, spending on “ICT & Other Machinery” has fared less well as the Q2-24 level was -5.9% lower than in the previous quarter and -2.8% down on a year earlier, but the 4-quarter rolling total grew by +0.9%.
For the industry breakdown, seasonally adjusted manufacturing investment was +0.6% higher than in Q1-24 but -0.9% down on Q2-23; the 4-quarter rolling total increased by +1.4% and investment by the manufacturing sector accounted for 16.9% of total business investment. For the Engineering & Vehicles industry group, investment in the 2nd quarter of 2024 was -0.9% lower than at the start of the year but +0.1% up on a year earlier, with the rolling 4-quarter trend seeing an increase of +1.9%; this group of industries accounted for 44.5% of total manufacturing investment.
You can download the ONS Statistical Bulletin for Business Investment from their website at https://www.ons.gov.uk/releasecalendar (30 September) or request it from MTA.