Production picking up pace

Posted on 8 Sep 2009 by The Manufacturer

Manufacturing’s slow-but-steady recovery indicators were boosted today by news from the Office for National Statistics (ONS) of a 0.2 per cent production increase in the three months to July.

The rise, compared with the three months to April, constitutes the biggest quarterly factory output growth in eighteen months.

The most improved sectors quarter on quarter were the transport equipment industries (up 6.9 per cent), the wood and wood products industries (up 8.4 per cent), and the rubber and plastic products industries (up 3.9 per cent). These will all have been buoyed by increased consumer demand in the automotive market, itself fuelled by the scrappage scheme. It was revealed Friday that 102,071 vehicles have now been registered under the scheme since its inception. Scrappage accounted for 25.1% of August new car registrations with 16,848 units.

Production was 11.4 per cent lower against the same three month period a year ago though and output was down in eight out of thirteen subsectors. The most inflicted were the machinery and equipment industries (down 2.7 per cent), the electrical and optical equipment industries (down 1.9 per cent) and is the basic metals and metal product industries (down 1.5 per cent).

“Manufacturers are going to have to get used to travelling sideways for the moment,” said Graeme Allinson, head of manufacturing, transport and logistics at Barclays Commercial Bank. “It is likely that these figures will continue to bounce around in this fashion over the coming months and although small increases are always encouraging, any dips should be no immediate cause for alarm. Manufacturers certainly need not embark on another round of destocking in the wake of variable monthly figures.”

Lee Hopley, head of economic policy at EEF, the manufacturers’ organisation says signs of recovery do not mean Whitehall can call it a job done just yet. “Given the recovery is likely to be a long and halting one, manufacturers will be looking for just as much stability in the upturn as when we were in the grip of the recession,” she said.