Britain’s much-vaunted ‘manufacturing surge’ is equal to one third of an HS2 tunnel

The surge is a myth and the trade deficit is still running at 30% a month. We are being conned.

By John Ward: This morning, with two days to go before Chancellor George Osborne dissembles for England about the state of the British economy, The Slog exclusively deconstructs the wobbly blancmange of “recovery evidence” being put out by Camerlot and its media buddies. Among many other things, it shows that in fact there is almost zero empirical evidence of manufacturing export growth, but such as exists amounts to £3.5bn…equivalent to one-third of an HS2 tunnel at today’s prices.

I have decided that, as a nation, the media are going to cram every last Brit into Room 101 during the coming week, and persuade us that there are four perfect new economic fingers showing, as opposed to just the one gnarled and frostbitten thumb turning an unpleasant shade of purpley-black.
Take the piece about it yesterday at Reuters – ‘UK manufacturing surges’.
First of all, it talks about British manufacturing. But spot the clue in the Osborne photo-opp blurb: ‘George Osborne tours a factory of train wheel manufacturers Lucchini UK in Trafford Park Manchester’. The fact that the name’s Italian and is suffixed ‘UK’ suggests it’s about as British as Prime Minister Abe of Japan. If you think this sort of thing doesn’t matter, remember how French company EDF told Cameron where to stick his energy price-freeze over the weekend.

Then there’s this belter: ‘British manufacturing grew at its strongest pace in almost three years in November according to a new survey’.
No it didn’t. The survey is a measure of purchasing managers’ opinions about what they think will happen. It’s not empirical, it’s predictive. It’s been wrong before, and it’ll be wrong again…very probably about this ‘recovery’.
Get this about how the survey should be interpreted: ‘The Markit/CIPS Manufacturing Purchasing Managers’ Index (PMI) jumped to 58.4 in November from an upwardly revised 56.5 in October. Index readings above 50 indicate expansion.’
But hang on Reuters: the readings have been above 50 for some time….minus the expansion thing. Next paragraph:
‘The index was its strongest since February 2011 and surged past the most optimistic forecasts in a Reuters poll.’
OK, let’s deconstruct that assertion half by half: ‘strongest since February 2011′. Anyone remember February 2011 leading to a recovery? Then ‘surged past the most optimistic forecasts’. So then, the Reuters previous negative forecasting polls were wrong…but for some reason, we’re asked to believe that this positive poll was right. This is all a bit déjà vu as regards George Osporn and his pet OBR.
“UK manufacturing continued to hit the high notes in November,” Markit economist Rob Dobson said. Did it Rob? How do you know? Only, all the sources I’ve visited said it didn’t hit any notes, high, bum or otherwise. But the Reuters piece goes on to claim ‘exports had one of their best months since the financial crisis, helped by demand from eurozone countries which are trying to dig out from the bloc’s debt crisis’.
Er…helped by eurozone countries….you mean the ones at the bottom of the pit where the pendulum swings ever lower? And ‘trying to dig out from the bloc’s debt crisis’. First of all, (a) WTF on God’s Earth does that phrase mean and (b) what were they using for money, given bank lending has all but collapsed?
“It looks as if the strong recovery in the sector is translating into meaningful job creation,” Markit’s Dobson gushed. But then this three lines later:
‘Economists said the rise in employment in the PMI survey – to 54.5 in November from 51.9 in October – was less strong than the jump in output.’
Well for a start there hasn’t been a rise, these are factory by factory opinions – not an audit. And far be it from me to be picky here, but it flatly contradicts what the Delphic Dobson said immediately beforehand….a fact underlined by ‘…the BoE’s view that firms are likely to squeeze more from existing workers rather than rush to hire new ones, meaning unemployment will fall slowly’. So no new job creation after all, then.
“Overall the performance of the manufacturing sector is very impressive. One is accustomed to the UK economy being led by the service sector. So to see manufacturing keeping pace with services is very encouraging,” BNP Paribas economist David Tinsley said in a note to clients.
What a truly risible observation: wake up Mr Tinsley….UK manufacturing is 12% of our economy’s exports, at best a quarter the size of our services performance, depending on whose lies you believe about the predominance of services bollocks in British output. Go to the ONS site for 2013 so far, and you will see this:

2013 Q1	75.9	102.1	-26.2
Q2	78.4	103.7	-25.3

The first line in the user-friendly ONS capture above shows that in Q1 2013, we had roughly £76bn in manufacturing exports, and that in Q2 that rose by all of £3.5bn. Note also column three showing that the deficit is almost one third of the output.
Just to put that ‘surge’ into perspective, the original HS2 train project budget was £33bn. Then it jumped by £10bn to £43bn because of the addition of a tunnel to the plans. So Britain’s surging manufacturing breakout is worth almost exactly one third of an HS2 tunnel. Stick that in your spin machine and eat it.

Face it people: we are being had. Well, we aren’t, because we are the Sloggertinis – and thus sparky girls and boys. But the remaining 90% of Horlicks drinkers out there are being yardbrushed up the back passage by the smoke and mirrors bullsh*t boys.
It was so obviously going to happen: The Slog warned you earlier today about the coming Tsunami of bollocks leading up to White Powder/Black escort Man’s Autumn Statement this Thursday. It’s already ploughing into shore at a height of fifteen meters…so best to head for the Hills of Sanity until the Golden Storm of lovely lovely funny-farm pixie-dust Nirvana Charlie has passed.
PS Not noted by the Reuters fiction: across the board, UK manufacturing prices were rising over the same period. So that’s going to make us really competitive in “the global race” as our “Prime” Minister is fond of burbling.

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