Manufacturing output registers surprise rise

Posted on 5 Aug 2009 by The Manufacturer

The notion that British manufacturing is beginning a slow but steady climb out of the downturn was given a boost today as official figures show a 0.4 per cent rise in output from May to June.

The Office for National Statistics revealed the transport equipment industries and the electrical and optical equipment industries led nine of thirteen sub sectors that grew during the month. They registered 4.1 per cent and 2.5 per cent growth respectively.

The turnaround led to a quarterly decrease in manufacturing output of just 0.2 per cent. The transport equipment industries again led the way, registering 3.5 per cent growth for the period. This may not be entirely surprising, given the effect the scrappage scheme has had on car sales and hence automotive output, but will provide a sense of respite after a first half-year dogged with decline and despair.

The basic metals and metal product industries continued to struggle though (-3.3 per cent for the quarter), as did the machinery and equipment industries (-3.1 per cent for the quarter).

However, all-in-all, production increased in six out of the thirteen sub sectors in the three month period.

“These better than expected manufacturing figures confirm our assessment that there are now positive features in the economy,” said David Kern, chief economist at the British Chambers of Commerce (BCC), though he warned “any improvement remains fragile.” He pointed to the fact that manufacturing is still down heavily on levels from last year.

“Whilst cautious about placing too much weight on one month’s data, these figures continue the recent pattern showing that industry may be through the worst,” added EEF head of economic policy Lee Hopley. “Rapid stock adjustments and a more favourable exchange rate will be helping production levels, which still remain significantly below pre-recession levels, but manufacturers will need to see clear signs of a pick up in global demand before a degree of confidence returns to the sector.”

Indeed, though any increase in the current economic climate can be deemed a positive development, the industry still has a high hill to climb before it reaches the levels at which it used to stand. Manufacturing output was 12.5 per cent lower in Q2 2009 than it was in the same period last year.