In the National Accounts published this morning, although the ONS left the Q4 growth rate unchanged at +0.1%, revisions to earlier periods means that growth in 2024 as a whole was revised up to +1.1% (from +0.9%). This was led by an upward revision for manufacturing output to a flat trend from a decline of -0.7% in the first estimate.
With no change to the estimates for GDP in the 4th quarter, we will focus this note on the other revisions and, in particular, the figures for 2024 where the most changes have occurred. We have already noted that manufacturing activity was revised up but the same effect was also seen in the other two major sectors of the economy. Construction output growth is now put at +0.6% (from +0.3%) and the services sector growth was changed to +1.5% (from +1.3%).
We will have to wait until the February manufacturing output data is released in a couple of weeks’ time to discover whether these revisions are in specific parts of the sector or spread across a range of industries but from the quarterly pattern there are significant changes to all 4 periods during 2024 for the sector. The wider GDP data revisions appear to be concentrated in the first half of last year, with the increased levels in the second part being largely due to the higher starting point. It is also worth noting that although the revisions go back to 2023, GDP growth for that year is unrevised at +0.4%.
Despite this good news – or perhaps better described as less bad news given that there wasn’t any growth in manufacturing in 2024 and the Q4 trend remains negative (-0.6% fall in output) – the most important feature of the National Accounts publication is the industry breakdown of the investment figures.
Before we look at the details, it is worth noting that total business investment fell by -1.9% in the final quarter of 2024, although for the year as a whole there was an increase of +2.0%. Within that total, spending on “ICT & Other Machinery” edged up by +0.3% in the final quarter and grew by +1.1% across the year; it accounted for a fraction over 30% of total business investment in 2024.
The industry level breakdown shows that, seasonally adjusted, investment by the manufacturing sector in Q4-24 grew by +1.1% compared to the previous quarter, but only by +0.2% for the year as a whole. During 2024, manufacturing investment accounted for 16.4% of total business investment – this is a higher share of the total than we see for output, emphasizing the importance of the sector to driving growth.
There is a further breakdown which identifies capital expenditure by the engineering & vehicles industries – this will include a majority of the customers for our sector. Here we see quarter-on-quarter growth of +2.3% at the end of last year, with an increase of +1.7% being recorded for 2024 as a whole. This means that this sector accounted for 44.6% of total manufacturing investment; again, this is a higher proportion of the manufacturing total that you would get by looking at output, giving further weight to our arguments around the importance of investment in this area for the economy as a whole.
You can download the ONS Statistical Bulletin for the National Accounts from their website at https://www.ons.gov.uk/releasecalendar (28 March) or request it from MTA.