UK December industrial output suffers sharpest decline since 2012

Posted on 10 Feb 2016 by Callum Bentley

British industrial output has suffered its sharpest monthly decline in December since 2012.

According to the figures released today by the Office for National Statistics, total production output is estimated to have decreased by 1.1% between November 2015 and December 2015.

Manufacturing output decreased by 0.2% in December 2015 compared with November 2015. The largest contribution to the decrease came from the manufacture of wood, paper products & printing, which decreased by 2.1%.

There were decreases in three of the four main sectors, with mining & quarrying having the largest contribution, decreasing by 4.0%.

Commenting on the figures, Georgios Nikolaidis, senior economist at EEF, said: “Today’s IoP wraps up the data for

Mike Rigby, head of manufacturing, Barclays.
Mike Rigby, head of manufacturing, Barclays.

what was a challenging year for UK manufacturing. The figures show that manufacturing output contracted marginally by 0.2% over 2015 as a whole. Last year saw the manifestation of a number of global headwinds, with subdued activity from the North Sea, the slowdown in emerging markets and continued lacklustre growth in the Eurozone providing limited support to the sector.

“Moving into 2016, there are no clear indications that the rollercoaster of risks is likely to abate anytime soon, although we do expect the sector to return to growth. But, manufacturers are not sitting on their hands nor are all sub-sectors experiencing the same conditions. Manufacturers look intent to continue investing in teasing out those productivity gains, as well as cracking on with their innovation plans to create new demand.

“In terms of sub-sectors, variation is set to persist with the transport and chemicals sectors continuing to grow strongly, while the mechanical equipment and metals sectors are likely to continue to struggle in a testing global market.”

Mike Rigby, head of manufacturing at Barclays, said: “Growth in manufacturing output continued to fizzle out as 2015 came to an end with weak export performance an ongoing frustration.  As we move into 2016, slowing global growth, uncertainty over a Brexit and the fallout from China will make this another challenging year for the sector.  However, manufacturers remain optimistic and have successfully negotiated tough trading conditions on many occasions in the past.”

Mark Stephenson, UK manufacturing industry leader, Deloitte
Mark Stephenson, UK manufacturing industry leader, Deloitte

Mark Stephenson, UK manufacturing industry leader at Deloitte, said: “Export conditions remain tough with a weak Euro and decreasing manufacturing output in the Eurozone. Continuing factory output shrinkage in China is affecting global markets and growth forecasts for manufacturers. Considerable headwinds clearly remain, but it’s not all doom and gloom.

 “Whilst the manufacturing PMI had a dip in December, it rose up again in January. Domestic demand remains strong with consumer credit confidence and spending continuing to rise. 2015 also represented a 10-year high in car production. Looking ahead, even a weakening pound could boost exports for UK manufacturers.”