Output from UK companies involved in manufacturing machinery, equipment and parts for industries including construction and mining remains stable, according to Office for National Statistics (ONS) data analysed by the
The six-month moving average for machinery and equipment output in 2016 remains relatively flat, after showing modest increases from the low point reached in March. In terms of a year-on-year comparison, output in the first 11 months of 2016 is 1.3% lower than 2015, but the difference is progressively narrowing as the year progresses (for example it was 1.8% lower in the first 10 months).
On a quarterly basis, output in Jul/Sep was 0.7% above Apr/Jun quarter, and 1.3% above Jul/Sep 2015. The CEA says that previous updates have identified that the pattern of modest improvement in output earlier in the year has been consistent with a modest pick-up in UK exports of construction and earthmoving equipment.
Initial figures for UK exports in Jul/Sep quarter show a small reduction of 3.4% on Apr/Jun quarter, and are probably the reason for output levels flattening out. The benefits of a weaker pound following the Brexit referendum do not seem to have provided any immediate stimulus to UK exporting of equipment.
Latest market comments on UK demand levels for machinery and equipment suggest it is remaining weak, in line with a weak construction market, with no significant stimulus to boost output levels. Expectations are that equipment sales in 2016 will show a double digit decline on 2015 levels, when figures are available.
Analysis of the data from the ONS on an annual basis shows that industries included within the Machinery & Equipment NEC category that are relevant to the CEA account for around 60% of the total output reported. This includes construction, mining and lifting equipment and parts. The remainder of industries within the Machinery category includes agricultural equipment, office equipment and a number of other industries.
ONS output data is based on company turnover collected on a monthly basis. Comparison of this data on an annual basis with Off-Highway Research production data for construction equipment shows very similar year on year % movements. As a result, monitoring of ONS monthly data is judged to be a useful indication of production/activity levels for UK construction equipment and parts.
