Downbeat trade figures as economy slows

Britain’s manufacturing and construction sectors contracted in March and the country’s trade deficit widened as the economy continues to falter.

Data from the Office for National Statistics (ONS) showed manufacturing output fell 0.6% in March, construction dipped 0.7% while industrial output as a whole slumped 0.5%, its third straight monthly decline.

The figures, which fell short of expectations, point to a further slowdown in momentum for the UK economy following the decision to quit the EU last year.

To compound matters, the UK’s total trade deficit in goods and services widened by £2.3 billion between February and March to £4.9bn, contributing nearly half of the quarterly deficit, which also grew by £5.7bn to £10.5bn.

Martin Beck, senior economic advisor to the EY ITEM Club, said the March trade data capped a disappointing set of official releases.

“The shortfall of exports relative to imports widened to £4.9bn from £2.7bn the previous month, a six-month high,” Mr Beck said.

“And the deficit for Q1 almost doubled from the last quarter of 2016, suggesting that net trade exerted a significant drag on output in Q1.

“That said, the trade numbers continue to be distorted by large movements in flows of non-monetary gold.

“Overall, signs that the economy has slowed continue to build.”

The industrial production figures were dragged down by a fall in housing repair and maintenance jobs and infrastructure, while the largest downward impact on production came from electricity generation.

On a quarterly basis, industrial output nudged up by 0.1% and manufacturing growth slowed to 0.3%.

However, the ONS said the figures implied no change to its preliminary estimate of 0.3% growth in the quarter.

Manufacturing slowed in March.