Plastics and food drive production growth
9 May 2014
Manufacturing was the strongest area of UK production growth, with process industries such as plastics and food & drink leading the way, the government revealed today.
According to the Office of National Statistics’ (ONS) Index of Production (IoP) for March, published this morning, production as a percentage of GDP increased by 2.3% between March 2013 and March 2014 to 15.2%.
The largest contribution to the increase was from manufacturing, which increased by 3.3% compared with a year ago and contributed 2.3 percentage points.
While total production in the first quarter of 2014 rose by just 0.7% compared with Q4 2013, manufacturing still performed strongest with a 1.4% rise over the quarter – the lower overall figure was mainly due a fall in the electricity, gas, steam & air conditioning sector of 5.1%. Gas and electricity’s year-on-year fall of 15.4% was the largest fall since March 1985, and was blamed on the average temperature in March 2014 being 4.5 degrees warmer than March 2013.
Output is now at its highest level in more than two and a half years
EEF deputy chief economist Neil Prothero
Within manufacturing the two largest growth sectors were plastics and rubber, and food and drink production.
The largest upward contribution to manufacturing growth was from the manufacture of rubber, plastic products & other non-metallic mineral products, which rose by 7.3% and contributed 0.6 percentage points to manufacturing’s growth between Q4 2013 and Q1 2014.
Plastics and rubber was also the strongest sector over the 12 month period from March 2013 to March 2014, with output rising by 14.8%. The majority of this contribution came from the rubber & plastic products industry, which increased by 10.1% and contributed 0.5 percentage points to manufacturing growth.
Meanwhile, the food, drink and tobacco sector made the second largest contribution to manufacturing growth over the past quarter, rising by 3.4% and contributed 0.5 percentage points to the manufacturing growth.
Pharmaceutical fall
In contrast, the largest downward contribution between Q4 2013 and Q1 2014 was from the manufacture of basic pharmaceutical products & pharmaceutical preparations, which fell by 5.8% and decreased manufacturing growth by 0.4 percentage points, having increased between the previous two quarters.
However, this looked potentially likely to be a blip, as over the longer period of February 2013 to March 2014 pharmaceuticals was actually the strongest performing of the manufacturing sectors, with its output rising by 4.2% and contributing 0.3 percentage points to manufacturing production growth.
Outside of the process industries, the manufacturing of transport equipment also performed well, which increased by 5.8% between March 2013 and March 2014.
“The strong momentum in the manufacturing sector was confirmed by a 4th consecutive monthly rise in output in March, buoyed by solid gains in the pharmaceuticals, transport and food sectors,” said EEF deputy chief economist Neil Prothero.
“Manufacturing production increased by 1.4% over the first quarter, a slightly stronger pace of expansion than indicated in the preliminary Q1 GDP data and the largest quarterly rise since mid-2010. Output is now at its highest level in more than two and a half years, highlighting the sector’s pivotal role in supporting the UK’s recovery, with firms confident of reporting further production gains in the second quarter.”
After manufacturing, the second and third strongest performers in March’s IoP for the first quarter were also areas related to the process industries: water, sewerage and waste management increased by 12.1% between Q4 2013 and Q1 2014 and contributed 1.0 percentage points to overall production; mining & quarrying output increased by 3.1% and contributed 0.4 percentage points to total production.
