U.K. IP Continues Its String of Advances

Summary

• U.K. manufacturing output rose for three consecutive months, boosting three-month growth to an annual rate of 9.1%.
• The 12-month gain was 4.4%, while the six-month annualized growth rate slipped to 2.8%.
• Month-to-month output fell for consumer durables & intermediate goods but expanded for consumer nondurables & capital goods.
• In August, output declined only for consumer durables, whereas July saw increases across all four sectors.
• At the industry level, three of five industries showed output increases in September, four in August, but all five recorded significant declines in July.
• Over the last three months, all sectors showed output increases, yet three of the five industries recorded declines over that same period.
• Sequential growth trends show acceleration from 12 to 6 to 3 months for consumer durables & nondurables, while capital goods saw steady increases without sequential acceleration.
• Intermediate goods showed no growth over 12 months, a decline over six months, & a 3% annualized gain over three months.
• U.K. manufacturing output rose by 3.6% annualized quarter-to-date to complete Q3, with only intermediate goods declining on the quarter.
• Quarterly increases occurred only for food, beverages & tobacco, while other industries shrank at a pace of 5% or faster.
• Post-pandemic growth from January 2022 to date was positive for all sectors except intermediate goods.
• Output declines on the post-pandemic comparison occurred for all industries except motor vehicles.
• September year-on-year growth ranked above the median pace for all industries except textiles & leather.
• Sector growth for consumer durables & intermediate goods registered below the median pace for the period since January 2012.
• U.K. inflation has risen, prompting the Bank of England to hike rates, with one MPC member seeking a 50bp increase before a 25bp hike was implemented.
• The economy grew by 0.7% in the current quarter following a 0.5% gain in the previous quarter, reaching an annualized quarterly pace of 2.8% in Q3.
• The U.K. economy is experiencing positive impacts from AI, though future growth & inflation relief depend on AI's continued performance.
• Oil prices & geopolitics remain central concerns for policymakers.