Output soars as weak pound boosts exports
FACTORIES cranked up output for the fifth straight month in September as the fall in the pound made UK-produced goods more competitive.
Booming demand for new cars and trailers, up 4.2 per cent in the three months to September, drove a 1.1 per cent rise in quarterly manufacturing.
The export boost helped industrial production grow at the fastest rate this year, up 0.7 per cent in September on the previous month compared with forecasts of 0.3 per cent growth.
The Office for National Statistics data also revealed the uneven nature of economic growth as construction output fell by 1.6 per cent.
The fall was 0.9 per cent in three months to September following a 0.5 contraction over the previous three months, the first consecutive quarter-on-quarter fall since 2012.
Housebuilding growth was overshadowed by falls in housing repair and maintenance, as well as private commercial work. Construction contributes 6 per cent of Britain’s output.
Pantheon Macroeconomics’ Samuel Tombs said the decline in commercial and infrastructure work “reflects companies holding back from investment decisions” due to political uncertainty. The overall positive tone sent sterling 0.4 per cent higher against the US dollar to $1.32. It also strengthened against the euro by 0.3 per cent to €1.133.
The ONS data reinforces positive surveys from the manufacturing sector, which makes up 10 per cent of GDP.
ING economist James Smith said: “You could still argue that, given the extent of the pound’s fall – almost 20 per cent since November 2015 – manufacturing should still be performing better.
“Given manufacturing represents a relatively small share of the UK economy, the weakness in consumer spending is a bigger consideration for the Bank of England. We don’t rule out another hike next year – but with growth likely to remain weak and signs of domestically-generated inflation still limited, we think the Bank will tread carefully.”