It’s the biggest monthly fall for ten months, and places factory output 1.4% down on this time last year. What’s worse is that the decline has seemingly come out of the blue – even for the pointy heads at the ONS. We were supposed to see a 0.1% rise in February. Not that a fraction of a percentage point is any great shakes, of course.
And the ONS is now also busily rewriting history. There was a 0.3% contraction in manufacturing in January, it states. Not the 0.1% rise announced by its own office just last month.
Ross Walker, economist at RBS, sums up the bemusement felt by UK plc: ‘It doesn't feel right - the 1% fall in manufacturing. It looks anomalous, it doesn't really go with the big grain of the surveys.’
Still, all is not lost. Rising energy production (a little jump at 0.4% - there had to be a silver lining to snow in April), and a beefed up service sector mean that the economy is better able to absorb the manufacturing flop. It’s but 10% of GDP, after all.
And ONS data is a volatile beast (hence the constant revisings up and down). Looking at the latest three-month period, manufacturing actually grew 0.2% to February, its best performance since last August and a marked improvement on the 1.0% rate of decline seen in November. And the manufacturing PMI hit a 10-month high in March. Factories wouldn’t be buying goods and services if there were no orders to fill, would they?
Still, the markets haven’t been all too supportive in the wake of the report. The pound has fallen more than 0.4 percent against the dollar. But mark MT's words: this isn't the last revision we'll hear for manufacturing data in the next month or so. It's a bumpy ride from the factory gate...