Statisticians Scratch Heads as UK June Output Plummets

07 August 2002

Britain's Office for National Statistics reports that manufacturing production fell in June by an eye-watering 5.3% – the greatest monthly fall since 1979.

Statisticians and economists are uncertain whether this reflects an alarming lurch toward recession or is simply a blip on the graph, attributable to one-off events such as the Royal Jubilee which led to two public holidays on consecutive days and widespread factory shutdowns.

There was also the fourteen-day soccerfest of the World Cup, the effect of which may have been underestimated as, due to world time diferences, many of the key matches were shown live during the working day.

The ONS accepts the data could have been distorted by the extra Jubilee holiday. “There is evidence that factories were shut down for longer periods than expected – in some cases the whole of the Jubilee week,” said an official.

But Philip Shaw, chief economist at Investec Bank, was less certain: “The drop in manufacturing exceeds expectations by a long, long way. The figures are probably influenced by the Jubilee bank holiday, but the picture for the second quarter is of the manufacturing sector still in recession.”

However, UK manufacturing industry has long been outpaced by the nation’s service sector, which remains in relatively rude health. A separate survey published Monday shows the sector continuing to grow in July, albeit at a slower pace than in June.

The influential business activity index of The Chartered Institute of Purchasing and Supply – seen as a service sector bellwether – slipped in July for the third month in succession, down from June’s 54.9 to 54.7. As with most such indices, a reading above 50 denotes expansion: a score below 50 signifies contraction.

Data sourced from: BBC Online Business News (UK); additional content by WARC staff