11 Apr 2018
Factory output falls in the UK for first time in almost a year
The record breaking expansion of the UK manufacturing sector came to an unexpected stop in February as British factory output fell. This was the first month-on-month drop in almost a year, adding to the signs the economy may have slowed in the first quarter.
It was a 0.2% fall compared to January. According to the Office for National Statistics the sector was dragged down as the result of declines in sectors including textiles, machinery and electrical equipment.
A strong global growth and a cheaper pound had boosted the UKs manufacturing last year.
An economist at the consultancy Pantheon Macroeconomics, Samuel Tombs, said:
“The modest stimulus to growth from sterling’s 2016 depreciation has begun to fade, while the global trade upswing has lost some momentum too.”
However, the UK is not alone as similar reports from France, Germany and Italy too have shown a loss in pace of manufacturing in the first few months of 2018.
The Bank of England is expected to increase its benchmark interest rates to 0.75% next month. The central bank believes the economy’s ability to expand without stoking inflation has taken a hit from poor productivity growth and weak investment.
Further signs of a weak quarter were seen by the decline in construction output, falling by 1.6 % in February.
Britain’s goods trade deficit narrowed, however, to £10.2 billion ($14.48 billion) in February from £12.2 billion in January, as imports fell by more than exports. The smallest gap since September and better than all forecasts in a Reuters poll, which had predicted a deficit of £11.95 billion.