The Chancellor of the Exchequer has declared the march of the makers is underway tasked with rebalancing the economy in an export drive to build the big society. Let’s hope someone has the map and the grand plan, for at first glance the manufacturing figures for May suggest the marchers are slowing down and getting out of step.
Overall the figures for May look pretty weak. Year on year the growth is just 2.8%, a significant slow down from the start of the year. This is still much better than April. A month in which weakness is explained by the Royal Wedding, the Bank Holiday and the Japanese tsunami impacting on car manufacturing supplies in the short term.
Strong sectors in May were food, drink and tobacco (4.7%), textiles (7.7%), machinery and transport equipment. Consumer durables were up by 4.8%, capital goods were up by 3.3%. Engineering volumes were up by 4.5% but consumer non durables were up by just 1.5% and basic metals by the same order.
It is hard to see why the overall figure is so weak. Wood, coke, chemicals, are the laggards along with non-metallic minerals. Someone appears to have switched off the power supply as electricity output fell by 1.5% and gas output fell by over 23%.
At this stage in the cycle, the manufacturing recovery is volatile. The May figures are not that bad but we have to be realistic. There is no real march of the makers set to rebalance the economy. Manufacturing has recovered by just 7.7% from the low in August 2009. It is still down by 9% from the peak in February 2008. It is more of a regrouping than a march, a recovery of sorts but still a long way off the top. Like falling off a cliff and waking from a coma. There is still much to be done to get back to where we were.
In Cromwell’s army, recruits didn’t know left from right. Marching drills were kept in line with the call of hay, straw, hay straw, as opposed to the more conventional left right, left right. Farm produce was tied to the legs of the luckless legionnaires to ensure one foot went in front of the other with some kind of uniformity.
To understand the march of the makers in 2011, picture the army with one foot dipped in the excrement of an adult male bovine animal and the other wrapped in it’s skin. Or is it the other way round? We have to get this right. We can’t formulate economic policy with sound bites from the Bullingdon boys. A hard look at the data would offer more scope for realistic policy.
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The views expressed are my own and in no way reflect pro.manchester policy. In no way should the comments be considered as investment advice or guidelines or reflect political bias. UK Economics news and analysis : no politics, no dogma, no polemics, just facts. JKA is a visiting professor at MMU Business School, an economist and specialist in Corporate Strategy, educated at LSE, London Business School with a PhD from Manchester Metropolitan University.
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