Total production output increased 2.1% in May 2015 compared with May 2014, with manufacturing output increasing by 1%.
The Index of Production (IoP) figures, released today by the Office for National Statistics (ONS) show that the largest contribution to manufacturing’s rise came from the manufacture of transport equipment.
Explaining the subsector’s 11% growth, ONS cited “a rise in the manufacture of air & spacecraft and related machinery.”
Manufacturing output decreased by 0.6% in May 2015 compared with April 2015, with the largest decrease – 3.7% – coming from basic metals and metal products.
In its industry spotlight on the manufacture of basic metals and metal products, ONS claimed that the sector accounts for 10.6% of total manufacturing output – covering activities involving basic iron and steel, and other basic metals and castings, as well as fabricated metal products (except machinery and equipment).
Compared to the pre-downturn GDP peak in Q1 2008, the three months to May 2015 saw production and manufacturing 9.2% and 4.6% respectively below the previous figures.
Commenting on today’s IoP data, chief economist at EEF, Lee Hopley said: “Despite a rebound in oil & gas extraction, the boost was not timely enough to trickle down the manufacturing supply chain where sectors supplying to the North Sea saw big losses in output.
“While output shrank on the month, however, it is up on the year driven by robust growth in other transport and pharmaceutical sectors. Looking forward, manufacturers in the oil & gas supply chain should also see demand pick up as capital expenditure in the North Sea resumes, which could provide light in the end of the tunnel for manufacturing as a whole.”
Head of Manufacturing at Barclays, Mike Rigby noted: “Although levels of production remain in positive territory, for manufacturers to really get a grip on the throttle, they need easy access to skilled labour which is proving a challenge.
“With wage inflation increasing and high levels of employment across the UK, the manufacturing sector should be looking closely at up-skilling staff to meet increased demand.”
Chief economist at Markit, Chris Williamson stated: “A second successive monthly fall in manufacturing output means the goods producing sector will act as a drag on the economy in the second quarter, leaving the upturn reliant once again on the service sector.
“The disappointing performance of the country’s factories, linked in part to competitiveness being hit by the strong pound, will no doubt act as a deterrent to any imminent hike in interest rates.
“The disappointing trend in the goods producing sector looks to have persisted into June. The PMI surveys saw the weakest manufacturing output trend for over two years, attributable in part to a faster rate of decline in export orders, which was in turn commonly linked by producers to the strong pound. In recent months, sterling has been running at its highest since 2008 on a trade-weighted basis.”
