Manufacturing production fell 0.4% in month-ago terms in October after rising in the previous two periods. By sub-sector, machinery and equipment remained a major drag, as the low crude oil price continued to weigh on activities embedded in the oil and gas supply chain.
Yet there was some divergence among sub-sectors, with pharmaceuticals and transport equipment gaining ground. Pharmaceuticals has improved as it moves past the patent cliff. Within transport equipment, motor vehicles has continued to benefit from recent stronger real wage growth and the unemployment rate falling to a seven-year low, while aerospace has been helped by a large back-log of orders.
By type of goods, capital products fell, yet again highlighting the drag from the low oil price on investment in the North Sea. Consumer goods also lost ground despite the recent strength of domestic demand, suggesting weaker global demand has taken a toll.
October’s data, along with the results of our fourth quarter Manufacturing Outlook report, suggest that the prospect of the sector contributing to growth in the UK economy this year has all but faded away.