Manufacturing output gains ground in September

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In last week's official first estimates of GDP ONS reported a 0.9% increase in manufacturing output in the third quarter of 2013.

Manufacturing output UP 0.9% in 2013q3 and UP 1.2% in September

7 out of 13 sub-sectors grew in September

STRONGEST growth in 2013q3 - Transport

BIGGEST FALL in 2013q3 - Pharmaceuticals

Today's index of production data gives us a bit more detail on what's happening under the surface. Some sectors have had more of a bumpy ride that the headline manufacturing statistics suggest. In August, an overall contraction in manufacturing was driven by sharp falls in pharmaceuticals and electronics. In both cases, these losses were reversed in September, leaving manufacturing production levels up 1.2%.

If we look over the past couple of quarters the most consistent performers have been the transport sector (which includes automotive and aerospace), rubber, plastics and non-metallic minerals (part of the construction supply chain) and chemicals. Near the bottom of the pile is electronics and metals.

% quarter on quarter changeSource: National Statistics

We've had a couple of solid quarters of growth in manufacturing so far this year, a positive run of PMI activity indicators and EEF's last Business Trends Survey pointing to continued optimism about output and orders in the final quarter of 2013. Our forecasts, therefore, show that the second half of this year should be the strong six month period the industry has seen since the end of 2010. Our central projections are also for quarter on quarter expansion to continue through 2014, with manufacturing posting growth in the region of 2% next year.

% change past six months on a year agoSource: EEF

NOTE: EEF next forecast update will be released with our Q4 Manufacturing Outlook on 2 December.

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Chief Economist

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