Fall in manufacturing output

Subscribe to Campaigning blog feeds


After a very strong run of monthly manufacturing data, index of production figures for May out this morning surprised significantly on the downside, indicating the sharpest fall in 16 months.

Manufacturing production fell by 1.3% over the month, the first decline since November 2013. According to the data, in May the sector erased almost all of its gains recorded over the preceding three months. Despite this reverse, manufacturing is still on track to expand for a fifth consecutive quarter in Q2 (output is currently 0.3% above its Q1 average), while production remains a solid 3.7% above its year-earlier level.

Although serving as a reminder that manufacturing (and indeed the wider economy) continues to face a number of headwinds, the scale of the decline in May is sharply at odds with still strong survey readings and positive anecdotal evidence across the sector. The official monthly data from the Office for National Statistics can be quite volatile, and we believe that the underlying level of manufacturing activity remains fairly robust. A bounceback in next month's output data is quite possible.

Industrial production and manufacturing(2010=100; seasonally adjusted)

Source: Office for National Statistics

Broad adjustment

On a monthly basis, output declined in 10 of the 13 manufacturing sub-sectors in May. The largest contributor to the overall decline was a 2.3% drop in the production of basic metals and metal products, which has shown a more volatile pattern of output than most other sub-sectors over recent years. The other main downward contributions came from the manufacture of pharmaceuticals and of computer, electronic and optical products. For all three of these sub-sectors, imports account for an above-average share of their total supply, possibly suggesting some impact from a modest pick-up in commodity input costs.

There was better news in the textiles and wood, paper and printing sub-sectors, both of which recorded moderate growth in May. Output of chemicals was unchanged over the month.

When viewed over a 12-month horizon, however, output trends across manufacturing continue to show a brighter picture, with production increasing between May 2013 and May 2014 in nine of the 13 sub-sectors. The main drivers of growth over the past year have been the manufacture of rubber and plastics products, machinery and equipment not elsewhere classified and transport equipment.

Growth in nine of thirteen subsectors% change, year on year

Source: Office for National Statistics


This person has now left EEF. Please contact us on 0808 168 1874 or email us at enquiries@eef.org.uk if you have any questions.

Other articles from this author >
Online payments are not supported by your browser. Please choose an alternative browser or make payments through the 'Other payment options' on step 3.