Category: UK Manufacturing

UK Manufacturing Output in Surprise Fall

Manufacturing output in the UK recorded a surprise fall of 1.3% in May, the biggest decline since January 2013.

UK manufacturing output contracted for the first time in six months in May, disrupting a run of “Goldilocks” data that showed the recovery was gathering pace.

Factory output shrank by 1.3pc on a month-on-month basis, according to the Office for National Statistics (ONS), following downwardly revised growth of 0.3pc in April. The figure from the Office for National Statistics (ONS) was much weaker than economists’ forecasts of an increase of 0.4%.

Manufacturing data and surveys so far this year have indicated that the sector is growing robustly. The wider measure of industrial output also fell in May, the ONS figures showed, dropping by 0.7%. Compared with a year earlier, manufacturing output was up 3.7% in May, down from April’s increase of 4.3%, while annual growth in industrial output slowed to 2.3% from 2.9%.

May’s decline in output echoes a similar stutter in German industrial production, which fell 1.8% in May, figures released on Monday showed.

Most economists said the sector was still likely to have made a healthy contribution to UK growth in the second quarter. “We had five consecutive monthly increases in April, which was phenomenal,” said James Carrick, an economist at Legal and General. “We didn’t quite make it six, but the analogy I would give is that if you think about the qualifying stages for the World Cup, if you win five matches and you lose one, you’re still top of the league.”

Others warned that “the bell is tolling for the UK’s economic ‘goldilocks’ period” of strong growth and low inflation. Marc Ostwald, a strategist at ADM Investor Services, said the capacity constraints and concerns about a premature rate hike highlighted in the BCC survey acted “as a timely warning that although growth is stable, challenges facing our recovery still remain.

“One has to wonder whether the bell is tolling for the UK’s economic “goldilocks” period, and by extension for the [pound’s] strength.”


David Tinsley, UK economist at BNP Paribas, described the results as a “heavy dose of reality” after a run of upbeat economic data.

“It is quite possible that the fall today reflects some erratic/seasonal influences,” Mr Tinsley said.

“It is noteworthy that German industrial production was similarly surprisingly weak yesterday. It could be production plans were affected by the relative lateness of Easter.”

Jeremy Cook, chief economist at currency company, World First, said the results were “puzzling”.

“This is the first decline in six months for UK factory output and calls into question just how strong the balancing act of UK growth really is.”

In May, the Bank of England predicted that the UK’s economic growth would begin to slow in the second half of 2014, but governor Mark Carney said recently there were few signs of this happening.

The pound fell by half a cent to $1.7085 against the dollar on Tuesday following the surprise fall, which saw output contract in ten out of thirteen manufacturing subsectors. On an annual basis, the UK’s industrial and manufacturing sectors have expanded by 2.3pc and 3.7pc respectively.

[Telegraph and BBC]

UK Manufacturing continues to flourish

UK manufacturing sector strengthens in June

Activity in the UK manufacturing sector grew at the fastest pace for seven months in June, a closely-watched survey has suggested.

The latest Markit/CIPS purchasing managers’ index (PMI) for the sector was 57.5, up from 57.0 in May. A reading above 50 indicates that the sector is expanding. Markit said the sector continued to “flourish”, with jobs being created at the fastest pace for more than three years. The survey results add to signs that the UK’s economic recovery is becoming more balanced.

The figure reflects one of the sector’s best spells of output and new order growth in the 22-year history of the survey and is the second-highest reading in 40 months, bettered only during this period by November’s 57.8.

The CIPS survey has now signalled expansion for the UK manufacturing industry for the past 16 months, with the June performance rounding off the sector’s best quarter since the start of 2011 and one of the best in the last two decades.

CIPS said strong domestic demand boosted new business sales, while export orders also edged higher despite the strength of the pound.

The latest official GDP figures, released on Friday, confirmed that the economy grew by 0.8% in the first quarter of the year and recorded the fastest expansion in business investment in two years.

Manufacturing employment also rose for the fourteenth successive month in June, with rising job numbers seen across all sectors and led by small and medium sized businesses.

Strong quarter

While the PMI survey indicated that manufacturing output saw a slight slowdown in the rate of growth last month, it said output had now increased for 16 months in a row. In addition, new orders grew at the fastest pace since November last year.

“UK manufacturing continued to flourish in June, rounding off one of the best quarters for the sector over the past two decades,” said Rob Dobson, senior economist at Markit.

“With levels of production surging higher, and order books swollen by a further upswing in demand from both domestic and overseas clients, job creation accelerated to its highest for over three years.”

David Tinsley, UK economist at BNP Paribas, said: “Manufacturing is growing strongly, and work flows suggest this has legs.

“This supports our view that UK GDP accelerated in Q2. As this news flow is absorbed further, rate hike expectations for the first hike in Q4 this year should harden.”

[BBC News + Belfast Telegraph]

UK manufacturing expands at fastest pace in three years

Solid upturn in UK manufacturing driven by “substantial increases” in both manufacturing production and new orders, Markit-CIPS PMI survey shows.

Manufacturing returned to form in November as the sector steamed ahead with the fastest growth in nearly three years, following two months in which the pace of expansion slowed.

The reading of 58.4 on the closely-watched CIPS/Markit purchasing managers’ index (PMI) survey – where the 50 mark separates growth from contraction – was the best level since February 2011.

Monday’s figures are further evidence that the recovery is gaining traction, creating the best economic backdrop in three years for the Chancellor when he delivers his 2013 Autumn Statement on Thursday.

The growth in manufacturing included a strong level of export orders – with new work from Asia, the US, Germany, France, Ireland, Belgium and the Middle East – but the domestic market remained the prime factor in order growth.

It was the eighth successive month of growth in manufacturing. The expansion in new orders surpassed a 19-month high seen in August.

The data suggest that manufacturing is on course to beat the 0.9pc growth it notched up in the third quarter, with the pace of growth so far in the final three-month period of the year tracking comfortably above the 1pc mark.

Employment in the sector rose at the fastest pace since May 2011, signalling that companies are creating around 5,000 jobs a month.

Manufacturers’ input costs rose for the fifth month in a row but companies reported some success in alleviating the squeeze by passing these on to clients.

Rob Dobson, senior economist at survey compiler Markit, said: “UK manufacturing continued to hit the high notes in November.

“Manufacturing and the wider economy are on course to build on the third quarter’s solid foundations.”

David Noble, chief executive of the Chartered Institute of Purchasing and Supply, said it was an “all-round glowing performance” for the sector.

“The sector’s solid growth was primarily underpinned by a strong domestic market, boosting new business in the UK and giving manufacturers the confidence to look ahead to the future,” he said.

“This was coupled with new export orders from key overseas markets accelerating at one of the fastest rates since the financial crisis.”

Samuel Tombs, UK economist at Capital Economics, said: “The improvement in the UK CIPS manufacturing survey in November should help to ease concerns that the recovery is entirely founded on an unsustainable housing market boom.”

Howard Archer of IHS Global Insight said that if it is followed by robust PMI data from other sectors this week, it will look very likely that gross domestic product growth for the fourth quarter “could at least match” the 0.8% of the third quarter.

James Knightley of ING Bank backed the view that unemployment would drop below the key threshold of 7% around a year from now – a figure which would prompt the Bank of England to be able to consider lifting interest rates.