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UK factory output rises for fifth month, boosted by fall in pound

UK factory output rises for fifth month, boosted by fall in pound
Published by
The Guardian

2m read

10 November 11.16am

Hargreaves Lansdown is not responsible for this article's content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest. Article originally published by The Guardian.

Output from Britain’s factories rose for the fifth consecutive month in September as the fall in the value of the pound made domestically produced goods more competitive.

Data from the Office for National Statistics showed that manufacturing production increased by 0.7% last month and by 1.1% in the third quarter of 2017.

In a further boost to the chancellor, Philip Hammond, before the budget later this month, the ONS also reported signs of an improvement in Britain’s trade performance, with the monthly deficit down by £700m in September.

Over the third quarter as a whole, however, the trade deficit widened by £3bn - evidence that the benefits of the fall in the value of sterling are taking longer to show up in exports than in manufacturing output.

There was less good news for the chancellor from construction, which contracted for the second successive quarter and is now officially in recession.

Kate Davies, a senior ONS statistician, said: “Manufacturing grew strongly with robust growth in cars and medical equipment. However, construction dropped for the second quarter running, driven by falls in commercial work and housing repairs.

“The UK’s trade balance with the rest of the world worsened, mainly due to large increases in imports of machinery, gold and fuel, partially offset by falling imports of aircraft.”

Manufacturing - which accounts for around 10% of the economy - has grown by 2.7% over the past year but remains below its level when the UK entered the deep recession of 2008-09.

The depreciation of sterling since the EU referendum in June 2016 has made UK goods cheaper in world markets and foreign-made goods dearer in Britain.

In September, the UK’s deficit in goods and services stood at £2.8bn, down from £3.5bn in August. A deficit of £11.3bn in goods was partly offset by a surplus of £8.5bn in services.

Over the three months to September, the deficit was £9.5bn, up from £6.6bn in the quarter ending in June.

Chris Williamson, UK economist at IHS Markit, said: “Official data confirm the survey signals of a multi-speed economy. While manufacturing is enjoying strong growth, construction is in the doldrums, entering a new technical recession.

“Both industrial production and manufacturing output surged 0.7% in September, notching up the best performance so far this year. The wider measure of industrial production (which includes energy and mining) and factory output were consequently both 1.1% higher in the third quarter, providing an important boost to the economy.”

This article was written by Larry Elliott from The Guardian and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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  • 10 November 11.16am
  • 2m read

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Article originally published by The Guardian. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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