Last week the Office for National Statistics (ONS) published their first estimates of annual growth in 2021. An estimated 7.5 per cent annual growth in 2021 puts the UK economy back in line with overall pre-pandemic output levels seen in February 2020.
Despite encouraging annual growth from the low base of 2020, the end of the year saw disruption to everyday life and economic activity from the spread of the Omicron variant, as UK GDP growth in Q4 2021 was just 1 per cent and the month of December saw a decline in GDP of 0.2 per cent.
A large increase in COVID testing and tracing activities and the extension of the vaccination programme helped to boost growth as service output rose by 1.2 per cent in Q4 2021, putting service output 0.5 per cent above pre-COVID levels. However, production output declined in Q4 2021 by 0.4 per cent and remains 3.6 per cent below pre-pandemic levels (February 2020).
Overall manufacturing production output in Q4 2021 was flat. There was marginal growth in the month of December of 0.2 per cent, but manufacturing output remains 2.5 per cent below pre-pandemic output levels. At the end of 2021, ADS members, and others across manufacturing were reporting disruption to supply chain sourcing of raw materials as well as disruption in to specialised parts and processing capacity.
Pharmaceuticals contributed the most the manufacturing output in Q4 2021 and is the sector in our comparison list that has grown the most since the pandemic first hit, up 27.1 per cent on February 2020. Looking at the growth in manufacturing sectors over the course of 2021, pharmaceuticals has grown 28.2 per cent on 20202 levels. food manufacturing output is fairly flat having increased 0.3per cent, and automotive output is 23.6 per cent behind 2020.
Manufacturing of transport equipment (including automotive) has struggled over the course of 2020 particularly with supply chain challenges. However, aerospace manufacturing output actually saw growth in 2021 as a whole, albeit from a base of heavy impact from the pandemic, and rose 4.6 per cent year on year to the end of December.
Aerospace annual growth but pandemic weaknesses persist
Aerospace is the manufacturing sector that remains significantly weaker than in February 2020, at 41 per cent smaller in terms of output. Aerospace manufacturing output continues to decline at a marginal rate and in December fell a further 0.3 per cent. The civil aerospace sector is still awaiting a rate ramp up which is impacting on UK manufacturing output, as are other disruptions in the supply chain.
UK flights (arrivals and departures) in December remained around 30-40 per cent below 2019 levels, which is actually a marked improvement on the worst levels during the pandemic, but COVID continued to disrupt the recovery from significantly strengthening.
The chart shows the low and flat output for the aerospace sector compared to other manufacturing industries and total UK GDP where our sector is suffering prolonged low levels of output.