UK industry shines, but Brexit looms

london — British industry had its strongest month so far this year in September and the trade deficit narrowed, offering some positive signs for an economy that faces a potentially difficult 2018 as Brexit approaches.

The figures published on Friday suggested manufacturing may go some way towards counteracting a consumer-led slowdown and offered some vindication to the Bank of England which last week raised interest rates for the first time in more than 10 years.

Sterling edged up to a day’s high against the greenback after the data.

“Stronger global growth and the effect of the weaker pound seems to be finally showing through in the UK manufacturing numbers,” said ING economist James Smith.

But the Office for National Statistics also announced a 1.6 per cent monthly drop in construction, while separate figures published on Friday showed British shops suffered their worst October for sales in a decade.

“Given that manufacturing represents a relatively small share of the UK economy, the persistent weakness in consumer spending is a bigger consideration for the Bank of England,” Smith said.

Most economists polled by Reuters think Britain’s economy will slow next year, in large part due to uncertainty created by a lack of progress in talks on the terms of Britain’s divorce from the European Union. —