Economy boosted by growth in exports
THE UK economy has strengthened, growing by 0.5pc in the three months to November as a weaker pound helped boost manufacturing exports, data from the National Institute of Economic and Social Research (NIESR) suggests.
This comes as official data showed exports to non-eu countries had grown. Excluding the EU, the trade deficit narrowed by nearly £3bn, as the impact of the cheaper pound made UK goods more affordable.
Figures released on Thursday also revealed improved export activity in every region of the UK, according to data from HMRC, with England’s and Scotland’s exports rising by 14pc and 19.9pc respectively.
Imports to the UK from the EU grew in the three months to October however, widening the trade deficit with the UK’S largest trading partner by £1.9bn, according to the Office for National Statistics (ONS).
Ruth Gregory of Capital Economics said surveys suggested “punchy” annual growth in export volumes should continue, while import growth should slow, in line with weaker consumer spending growth, helping to shrink the gap between imports and exports.
Overall, the total trade deficit widened by £800m to reach £6.9bn. These figures exclude items known as “erratic commodities” such as trade in gold held in Ukbased clearing houses and oil.
Amit Kara, of NIESR, said: “UK GDP growth remains supported by the dominant service sector as well as industrial production.” ONS data showed that industrial production output had increased by 1.2pc in the three months to October. This was “in part because of exchange rate effect on exports,” Mr Kara said.
Manufacturing activity was chiefly responsible for pushing up industrial production – which accounts for 14pc of GDP – rising by 3.9pc year-on-year. The ONS said this growth was “broadbased” across the sector.
The single biggest area of growth in manufacturing was within transport equipment, which grew by 9.3pc. Of that, air and spacecraft manufacturing reported fierce expansion of 11.5pc.
Mr Kara added that construction remained “under pressure”. This follows data showing a 1.7pc contraction in the sector, which disappointed economists expectations of 0.1pc growth.
However, construction firms also reported record order levels in October, following a long run of weak performance. In the three months to October, new orders rose by 37.4pc compared with the previous quarter. This was driven by spending on infrastructure building projects.
New work – excluding infrastructure – also grew by 4.1pc with significant recovery in new housing orders. In the three months to June, these contracted by 4.2pc, but in the three months to October they rose by 9.5pc, this appears to fit with the pattern of a sector climbing out of recession.
More recent data, gathered in November for the Purchasing Managers Index and compiled by IHS Markit, gave the sector a score of 53.1 on a scale where anything above 50 suggests growth.