UK Industrial Production Growth Slows On Oil & Gas Extraction
UK industrial production grew at a slower pace in July amid the weakness in oil and gas extraction and a bigger-than-expected decline in construction output due to fall in new work.
Industrial production grew 0.2 percent month-on-month in July, slower than the 0.5 percent increase seen in June, data from the Office for National Statistics showed Friday. The monthly rate came in line with expectations.
The expansion was largely driven by manufacturing output, which advanced 0.5 percent led by car production. Factory output expanded for the first time so far this year. Economists had forecast a moderate growth of 0.3 percent after stagnation in June.
Meanwhile, the mining and quarrying output fell 1.2 percent as oil and gas extraction contracted 1.4 percent.
Year-on-year growth in industrial production improved marginally to 0.4 percent in July, while the annual rate was expected to stabilize at 0.3 percent.
Manufacturing output increased 1.9 percent annually after expanding 0.6 percent a month ago. The pace of expansion was forecast to accelerate to 1.7 percent in July.
Another report from the ONS showed that the construction output fell 0.9 percent in July from June, driven by a 1.4 percent drop in all new work. Output was forecast to ease 0.3 percent.
In a separate communique, the ONS said the visible trade deficit widened in the three months to July, primarily due to an increase in the imports of finished manufactured goods.
The visible trade deficit increased by GBP 1.1 billion to GBP 34.4 billion in the three months ended July.
The total trade including goods and services showed a shortfall of GBP 8.6 billion primarily due to the widening of goods deficit, which was partially offset by a widening of the trade in services surplus by GBP 0.7 billion.
In July, the total trade deficit was almost stable at GBP 2.87 billion. At the same time, the visible trade deficit totaled GBP 11.57 billion in July compared to GBP 11.53 billion in the previous month.
Today's flurry of activity data suggests that external-facing sectors are still providing little offset to the consumer slowdown, Ruth Gregory, an economist at Capital Economics, said. But there are some signs that net trade could provide more support in the quarters ahead.
Elsewhere, the British Chambers of Commerce on Friday upgraded its UK growth forecast for this year to 1.6 percent from 1.5 percent, citing moderately stronger outlook for consumer spending growth.
However, the outlook for 2018 and 2019 were lowered to 1.2 percent and 1.4 percent, respectively. A weaker contribution from net trade and more subdued consumer spending growth were the main reasons for the slight downgrade, the lobby said.
According to the BCC, the first increase in UK official interest rates, to 0.5 percent, will occur in third quarter of 2018.