Manufacturing on positive streak but construction flops

Sector sees longest period of monthly expansions since records began in 1968

Britain’smanufacturingsector has expanded for nine months in a row for the first time since records began in 1968 despite a slowdown in growth at the start of the year.

Official figures yesterday revealed growth of 0.1 per cent in January compared with the month before as factories benefit from strong global demand and a Brexit-buffeted pound.

Overall industrial production jumped 1.3 per cent in January, with growth driven mainly by the reopening of the Forties oil pipeline, which was shut down for three weeks after a crack was discovered in December.

However, in further mixed signals on the state of the UK economy, a slowdown in housebuilding contributed to the biggest monthly decline in construction output since June 2012.

The latest figures from the Office for National Statistics (ONS) showed that output fell by 3.4 per cent between December and January, while new orders tumbled 25 per cent in the fourth quarter. The statistics body said the construction sector remained “a weak spot” in the economy.

Investment in commercial developments, particularly in London, has slumped since the Brexit vote as higher construction costs and uncertainty has seen developers hold back on new projects.

Ole Black, a senior statistician at the ONS, said: “Construction continues to be a weak spot in the UK economy with a big drop in commercial developments, along with a slowdown in housebuilding after its very strong end to last year.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Commercial work will continue to fall if, as we expect, progress in Brexit talks remains slow.

“We doubt that housebuilding will recover fully soon. The prospect of further increases in interest rates is subduing buyer demand both for new and existing homes.”

Mining and quarrying provided the largest upward contribution to the rise in industrial production, increasing by 23.5 per cent.

Black said: “Manufacturing has recorded its ninth consecutive month of growth but with a slower start to 2018. Total production output continues to advance, bolstered in January by the Forties oil pipeline coming back on stream after December’s shutdown.”

Josie Dent, economist at the Centre for Economics and Business Research, said: “Month-on-month manufacturing growth was positive for the ninth consecutive month, which is the longest period of monthly expansions since records began in 1968.”

The official figures also showed that the UK trade deficit in goods and services widened by some £600 million to £3.1 billion between December and January.

Dent noted: “There were large decreases in fuel export volumes as well as increases in fuel import prices which contributed to the expansion of the deficit.”

sreid@scotsman.com