Manufacturing output nudges upwards

Published:  23 February, 2010

UK: The Office for National Statistics (ONS) reported 0.1% growth in the last quarter of 2009 that brought six consecutive quarters of decline to an end. A return to growth in the manufacturing sector contributed to the overall rise. Manufacturing output increased for the first time since Q2 2008, by 0.4%. Construction output was unchanged from Q3 2009.

Merchant sales

Builders' merchants sales for December 2009 when adjusted for both price inflation and trading day differences were down 0.4% for the three months October-December 2009 when compared with the same three months in 2008.



They were down 5.7% when compared with the preceding three-month period July-September 2009. The 12-month comparison was down 13.9% over the previous 12-month period and the monthly comparison was down 0.1% over December 2008.

Construction companies

Nearly 3000 construction firms entered insolvency in 2009, a 33% increase from 2008and more than double the number recorded in 2005, according to Pricewaterhouse Coopers. The construction industry accounted for 15% of total insolvencies across all sectors in 2009.



Mortgage approvals

The British Bankers' Association (BBA) reported mortgage approvals edged up slightly in December, with gross mortgage lending strengthening slightly as borrowers brought loans forward prior to the end of stamp duty relief. However, both remain below their respective historic averages.

Manufacturing production

The CBI's latest Industrial Trends Survey showed that in the three months to January, manufacturing production rose for the first time in two years, largely due to weaker stock reductions and growth in export orders. However, domestic demand was still weak, and the availability of credit was cited as a significant constraint on both outputand export orders in the coming quarter.



House prices

According to Nationwide, house prices rose for the ninth month running in January (by 1.2%), and were 8.6% higher than a year ago - the fastest annual increase since October 2007. However, the three-month-on-three-month rate of growth slowed slightly further, indicating some deceleration in underlying house price inflation.



Latest data from the Royal Institution of Chartered Surveyors (RICS) showed that adverse weather in January affected activity in the housing market, with new buyer enquiries, agreed sales and new instructions to sell property all falling. The decline in new buyer enquiries was the first since October 2008.

Future trends

The February 2010 Construction Products Association Construction Trade Survey suggested that conditions for construction are likely to continue to deteriorate during 2010. It reported that 78% of heavyside construction product manufacturers had endured a fall in sales in 2009 Q4. 45% of building contractors suffered a fall in output and 77% of civils contractors reported their workloads fell.


It also reported that 89% of lightside product manufacturers reported that they anticipate sales to remain unchanged in 2010 Q1.

Inflationary pressures have resurfaced making operating conditions more challenging.

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