No surprises in manufacturing
The December Index of Production results for industrial output will have been disappointing for anyone who hopes that manufacturing is going to lift the rest of the economy but not much of a surprise for anyone else.
The year-on-year results are OK. Over the 12 months from December 2009, the Index of Production rose 3.6 per cent and the Index of Manufacturing (which is by far the biggest element of the IoP) rose 4.4 per cent. This is an improvement on a we have become used to over the past year, which is nicely sustained (though not startling).
The change from November is a bit of a cause for concern, though its too early to worry. The IoP is up 0.5 per cent (very nice) but the IoM is actually down slightly, 0.1 per cent.
Remember the usual cautions about very small month on month changes – this is within the statistical margin of error and later revisions could change the picture. (Indeed, one reason for this fall is a small upwards revision of the November figures.) Nonetheless, it means that we should pay a bit closer attention to next month’s figures to see if we get more of the same.
The government will probably prefer to ignore these figures, but if they do have to comment they may blame the results on the snow, just as they did with the GDP figure. In fact, there’s even less justification for that here – the Office for National Statistics release says that the bad weather may well have something to do with the improvement in the Index of Production, because there was a large increase in electricity and gas output, but there isn ‘t much evidence that it was an important factor underlying the fall in the Index of Manufacturing.