Car production lines drive manufacturing
MANUFACTURING grew at its fastest this year in July after UK car production moved up a gear.
The Office for National Statistics said factory output expanded by 0.5 per cent – its first “significant” monthly rise since December – boosting total industrial production 0.2 per cent compared with the previous month.
The number of vehicles and trailers rolling off production lines accelerated by 13.7 per cent, for its strongest growth since March 2009.
But construction output fell by 0.9 per cent – a fourth straight monthly decline – as new work dried up.
The official data echoes recent purchasing managers’ surveys suggesting a rebalancing of the economy towards manufacturing, with increasing demand from both domestic customers and overseas as a weaker pound makes UK products more competitive.
But with construction and the dominant services sector both faltering, economists predict the economy is set for more “sluggish” growth of about 0.3 per cent in the third quarter.
Howard Archer, chief economic adviser to the EY ITEM Club, said: “July’s rise in manufacturing output fuels hope that healthy activity portrayed by the CBI and purchasing managers’ surveys is now actually feeding through in terms of improved production. A very competitive pound and improved global demand should buoy UK manufacturers competing in foreign markets. The weakened pound could also encourage some companies to switch to domestic sources for supplies, which would help manufacturers of intermediate products.”
The British Chambers of Commerce has downgraded its growth forecast for the UK economy from 1.3 to 1.2 per cent for 2018 and from 1.5 to 1.4 for 2019.
Director general Dr Adam Marshall said: “The UK economy as a whole is treading water and there is no sign of a return to healthier levels of growth. The constraints created by skills gaps and shoddy infrastructure outweigh benefit from the depreciation of sterling.”