U.K. Manufacturing: Output Trend Eases

U.K. manufacturing output rose by 0.4% month-to-month in May, reversing the output drop from April. Sequentially output is in a low-growth profile gain at a pace of 0.6% over six months and 12 months. The three-month growth rate registers a negative 4.2% at an annual rate. Quarter-to-date IP is falling at a 4.5% annual rate. Manufacturing output is still 4.2% below its level of January 2020, before COVID struck. That’s four years and output is still lower on balance.

April showers; still few May flowers Sectors show mixed results with consumer durables output lower in May, nondurable goods output higher month-to-month by 1.1%, intermediate goods output higher, and capital goods output lower. It’s a mixed bag in May.

Sequential Growth Rates Sequential growth rates from 12-months to 6-months to 3-months show consistent negative growth rates for consumer durables. They tend toward weaker results but do not progress steadily since there is less weakness over six months than over 12 months. Similarly, consumer nondurable goods output shows consistent growth and tends toward acceleration except for a weakening in growth over six months. Intermediate goods output runs a pattern like that for consumer durables, growth rates that are consistently negative and tending toward more weakness. Capital goods output growth is positive over 12 months and six months, but growth slows over six months and declines over three months, exhibiting clear sequential deterioration.

Key Industries Key industries are mixed as well. Sequentially only food, beverages & tobacco output grows over each horizon. Textile & leather output declines on each horizon. Textile & leather is sequentially deteriorating along with vehicles and essentially utilities where 12-month and 6-month output growth is at nearly the same pace before dropping over three months. Only mining and quarrying has output stronger over three months than over 12 months.

Summing up U.K. manufacturing continues to struggle without much in the way of good news in this report. The economy does not seem to have an industrial trend that is strong apart from food and drink. U.K. inflation has moved lower but core inflation has gotten stuck or slowed its drop or stopped falling altogether, and at a pace above what the BOE targets. The picture remains difficult with new leadership set to chart their course.