Friday, June 10, 2011
Wedding day blues for industry
Posted by David Smith at 03:00 PM
Category: Thoughts and responses

The April industrial production figures were far worse than analysts expected. Not only was there a fall of 1.7% on the month but production was down by 1.2% on a year earlier. Manufacturing output fell by 1.5% and was up by only 1.3% on a year earlier.

Looking at some of the analysts' interpretations and those from industry, as well as the Office for National Statistics, it is sensible not to be too gloomy about these figures. The ONS release is here and here are a couple of pertinent points from it: "The additional April royal wedding bank holiday is likely to have had some impact on the April manufacturing data. Following standard ONS seasonal adjustment practice, which involves estimating and removing repeating calendar effects from the data, for example Easter, no adjustments have been made to the published data to remove the effect of this non-recurring bank holiday.

"We received feedback from a number of companies indicating shut downs were the reason for sales figures being lower than expected ... In June 2002, an extra bank holiday was created for the Queen’s golden jubilee. The late May bank holiday was also moved to the start of June. Between May 2002 and June 2002, manufacturing fell by 5.4 per cent, with changes in working patterns causing the fall.

"A number of car manufacturers have provided feedback indicating that the after effects of the tsunami in Japan reduced production levels in April 2011, due to a lack of parts. The transport equipment sub sector fell by 4.1 per cent compared to March 2011, the largest month on month decrease since July 2010. Within this sub sector, motor vehicle production fell by 7.6 per cent, also the largest month on month decrease since July 2010.

"In addition to this, we had feedback from some companies in the machinery and equipment sub sector and the other manufacturing sub sector that the tsunami had impacted on their production levels.

"April 2011 was the warmest April since records began. This affected both electricity and gas supply output due to reduced demand. Between March and April 2011, electricity supply output decreased by 4.3 per cent and gas supply output decreased by 11.2 per cent."

The National Institute of Economic and Social Research seems untroubled by the data, according to its monthly GDP estimate, which feeds in these figures. It reckons that GDP rose by 0.4% in the three months to May. Not strong, but not collapsing.