Business concerns continue to hinder UK Index of Production

Posted on 8 Apr 2016 by The Manufacturer

Total output decreased in February, with the largest drop attributed to manufacturing, according to the latest Index of Production data.

The Office for National Statistics (ONS) has released its Index of Production for February 2016, revealing that total production fell by 0.5% compared with the same month a year ago.

The largest contribution came from manufacturing, with a drop of 1.8% – the largest fall since July 3013. There were decreases estimated for 10 of the 13 manufacturing sub-sectors.

Total production is projected to have decreased by 0.3% between January 2016 and February 2016, with manufacturing again having the largest contribution – 1.1%.

Lee Hopley, chief economist, EEF.
Lee Hopley, chief economist, EEF.

Chief economist at EEF, Lee Hopley commented: “Today’s data confirms the ongoing weakness across manufacturing with broad-based falls across more or less all the sub-sectors leading to a hefty month on month decline.

“This points to a fairly dismal first quarter for industry that will again pose a drag on GDP growth. While we might attribute some of the weakness to volatility in the data, the direction of travel does reflect the more subdued sentiment we’re picking up from across industry.

“Taken together with the disappointing trade numbers and, the dip in productivity at the end of last year, it appears that a return to a more balanced recovery across the economy is dissipating.”

Managing director of Digital Factory, Siemens UK & Ireland, Brian Holliday said: “The latest Index of Production figures…once again focusses attention on a pressing need to improve the UK’s productivity performance to upscale competitiveness, generate economic growth and create skilled jobs.

Brian Holliday, managing director, Siemens UK & Ireland.
Brian Holliday, managing director, Siemens UK & Ireland.

“Manufacturers are a key element in solving the UK’s so-called ‘productivity puzzle and according to a recent consultation undertaken by Siemens with the manufacturing community, they are clear on what the priorities should be to improve matters.

“They believe more must be done in critical areas such as developing workforces with industrial digital skills for future needs, together with a renewed emphasis on STEM education. They want sustained Government investment in critical infrastructure – road, rail, ports, and communication – and seek assistance to enable them to reap the productivity benefits of new technologies such as digitalisation and automation.

“They also want companies to be encouraged to create a spirit of innovation in product development and advanced high value manufacturing so that brilliant ideas can be turned into commercial reality.

“Educate. Invest. Innovate.  The message from manufacturers is clear.  We hope policy makers are listening.”

Mike Rigby, head of manufacturing, transport and logistics, Barclays.
Mike Rigby, head of manufacturing, transport and logistics, Barclays.

Head of manufacturing at Barclays, Mike Rigby noted: “Manufacturers are clearly up against it with slowing global growth, turmoil in the steel industry and ongoing uncertainty around a Brexit frustrating performance, but they are resilient and have successfully negotiated challenging conditions before.

“Caution in the sector is understandable, but it will be the first out of the blocks to raise investment who will be best placed to thrive.”